ΔMP & Σ(ΔMP) -Τhe Latest Technical Indicator by TradingCenter

TradingCenter is always striving to provide the trading community with innovative technical analysis tools and techniques. The aim is to help traders better analyze the financial markets and accurately understand the cyclicality of certain asset classes. ΔMP is the latest technical analysis tool by TradingCenter. ΔMP is an indicator that can be used on any financial asset and almost on any chart timeframe.

Introducing ΔMP -Measuring Momentum using Historical Intraday Ranges

In my latest eBook, I introduced ΔMP. The mission of ΔMP is to measure and illustrate the historical momentum of any Forex pair, or any other financial-traded asset. The book is found here:

► The Hidden Patterns Behind 15 Forex Pairs: Revealing Momentum and Seasonal Patterns Based on 18.5 Years of Daily Exchange Rates

Forming ΔMP:

ΔMP is formed by summarizing the historical divergence between closing rates and intraday ranges.

Calculation

This is how ΔMP works:

ΔMP reflects the daily difference between the Closing Price and the Mean Price

□ Where:

Mean Price = (Daily High + Daily Low) / 2

ΔMP = {(Closing Price – Mean Price) / Mean Price} %

Read more: ΔMP and Σ(ΔMP) Indicators

Chart patterns are distinct formations on a price chart of a financial-traded asset. There are many different types of chart patterns that are distinguished by a wide variety of unique features. When a chart pattern is confirmed, there is a high probability that a certain (upward/downward) price movement will occur, in the near future. A chart pattern is not able to predict with certainty a future price movement, however, it can indicate a high-probable trend reversal or continuation. Chart patterns are very useful in confirming the indications of other technical analysis tools such as MACD or RSI.

Two Categories of Chart Patterns (Reversal and Continuation Chart Patterns)

There are two major pattern categories -the Reversal and the Continuation Patterns. Reversal patterns signal the end of the current trend and continuation patterns signal that the price trend is likely to continue in the same direction.

(Α) MAJOR REVERSAL CHART PATTERNS

(1) Head and Shoulders Patterns

• Reliability: 7/10

The Head and Shoulders pattern is widely used among traders and is considered one of the most reliable reversal patterns. The timeframe of these patterns includes a few weeks to many months. There are two types of head and shoulders chart patterns (top/bottom).

(i) Head and shoulders top is a chart pattern that signals the end of an uptrend (on the left of the following chart)

• Success rate (≥ break-even): 81%
• Average decline: 16%
• Percentage meeting target: 51%

(ii) Head and shoulders bottom, or inverse head and shoulders, that signals the reversal of a downtrend (on the right of the below chart)

• Success rate (≥ break-even): 90%
• Average rise: 45%
• Percentage meeting target: 71%

Read more: Chart Patterns & Probabilities