Ray Barros Method Introduction

[gassah 10]

Today provides an example with EURGBP. The daily shows the zone comprised of the time-price window (TPW), MIDAS and the retracements. The setup is the contraction setup as the range of the bars and volume shrinks (volume not shown). There is also a potential "repo" (continuation spring) on the 5d.

 

The 60m (Forex uses 60m or 290m for intraday) shows the trigger bar overnight. I'll have to wait till EOD and decide whether or not to stay in this add-on position.

 

Rob

[bigbird 10]

Hi Rob,

 

If I use the following sequence of tf for mini-dow,

 

SHTF: daily with 5p

FHTF: 80m: 5p

TTF: 15m: 5p for lagging patterns

FLTF: 3m: 5p for forecasting patterns

SLTF: 3m bars (or we can use 5p of 30s, but not necessary)

 

Is it alright to use charts based on 24 hour data? Or I should restrict just to the data in regular US trading hours:question:

 

I'm also trying to trade the EURUSD futures (6E), I suppose I can use the same tf as above, since the pit-session is also similar to mini-dow:question:

 

Thanks!

[gassah 10]

For active 24 hour markets then it's the daily (1440m), 290m, 60m,15m. If you're only going to trade the Dow during US market hours then it's still daily, 80m, 15m. I'm assuming the overnight Dow futures aren't that liquid but I don't know.

 

Rob

[bigbird 10]

Dear Rob,

 

For active 24 hour markets then it's the daily (1440m), 290m, 60m,15m. If you're only going to trade the Dow during US market hours then it's still daily, 80m, 15m. I'm assuming the overnight Dow futures aren't that liquid but I don't know.

 

Regarding the mini-dow (or similarly the mini-S&P 500) being not so liquid outside of US trading hours, that's true. A quick confirmation, from your reply, for mini-dow, so I should configure my charting software to filter away data outside of regular trading hours since the 80m, 15m, etc, tf is derived from the regular trading hours:question: Currently, my daily chart is showing daily bars which are formed using the O, H, L, C of the entire 24 hours period (instead of the O, H, L, C of just the regular trading period). And currently, my 80min chart also displays bars throughout the 24 hours. If I just display bars only for the regular trading hours, the swings will look obviously different.

 

Thanks!

 

As you can see, I'm still at the setting up phase and have not come to the interesting stuff yet!

[gassah 10]

Right, just use the regular trading hours.

[bigbird 10]

Hi Rob,

 

While I was reading Ray's blog @ What is a RePo and 313Outside? Blog for Trading Success: Ray Barros, I got confused over the reply Ray gave to Wee Meng.

 

Wee Meng asked the question: "What context is used to view a congestion pattern at C, rather than an “active” upthrust pattern?"

 

Ray replied: "So in an uptrend, the continuation patterns occur at the bottom and the CIT pattern occurs at the top."

 

Do you have any insight? Thanks.

[gassah 10]

Ray makes a distinction between springs in uptrends (continuation) and springs that occur as reversal patterns. A repo is borrowed from Joseph Hart's Trend Dynamics and stands for reverse potential, and they are the continuation springs. The reversal springs happen after a prolonged downtrend.

 

""So in an uptrend, the continuation patterns occur at the bottom and the CIT pattern occurs at the top."

 

I believe he means the continuation springs are by definition at the bottom of the range and the CIT pattern in an uptrend or upthrust, occur at the top of the range.

 

Another interpretation is that continuation springs are more likely to happen early in an uptrend, early in the mark-up phase, and CIT patterns (upthrusts) occur after a prolonged mark-up and distribution (the top).

 

This point about only looking for CIT patterns after a prolonged trend is important. Apparent CIT patterns are much more likely to fail, with the trend continuing, if the trend is immature. This is why shorting upthrusts too early in a trend is not a good idea.

[bigbird 10]

Dear Rob,

 

As you know, one of the uses of X, AB labeling that Ray taught is to allow us to compute the Maximum Extension (ME), which in turn allows us to decide whether a spring pattern has formed. Unfortunately, I met some problems labeling, I will use the figures attached to describe the problem. Though I have gone back to revise the X, AB labeling, I'm not able to ascertain the answer to my question.

 

Referring to figure 1.jpg, I would have labeled X, A, B at 3, 4, 5. But Ray would sometimes label X, A, B at 4, 5, 6. This would give a different ME, which may give a different conclusion related to whether a continuation spring formed at 7.

 

I'm not sure which one to use, 345, or 456:question:

 

For 2.jpg and 3.jpg, how would you have labeled X, A, B:question:

[gassah 10]

Hi,

 

The upper boundary is either 10% of 3-4 or 20% of 4-5, whichever is greater, assuming 3-4 is at least impulse mean.

 

The bottom boundary doesn't use 3-4, i.e., you don't take 20% of 3-4 and apply it at the bottom boundary. In this case 4-5 marks the boundary of congestion because 7 hasn't retraced far enough back into the range to count as a point to consider.

 

I'll address the rest later.

[gassah 10]

I'd use 4 and 5 as A and B in the second example.

 

I'm assuming you are looking at the 5d swings only. In example 3, 7-8 are AB. 4 to 9 is a downtrend, not congestion, because 8 did not retrace above the PBZ of 5-6. Therefore 7-8-9 is its own entity and the ME is 20% of 7-8. You can also use 10% of 6-7 if its impulse mean but it might not be. If it isn't then move back to 10% of 4-7.

[bigbird 10]

Dear Rob,

 

The bottom boundary doesn't use 3-4, i.e., you don't take 20% of 3-4 and apply it at the bottom boundary.

 

Do you mean 10% of 3-4 and not 20%:question: Anyway, this is something new to me. I thought we should apply 10% 3-4 on the bottom boundary as well.

 

In what situations would you label 456 as XAB:question: I attached one of Ray's charts. The blue line is the 5D while the red 18D. He labeled 456 as XAB in this situation, but I'm unable to figure out why this is so.

 

Thanks!

[gassah 10]

The opposing boundary always uses 20% AB. 10% XA is only in the direction of the trend. I'm pretty certain of this, unless you can point out where it says otherwise. Thanks.

[gassah 10]

Ray might have used the labeling you mention to identify the PBZ for the spring. He'll use the latest inside swings for this purpose.

[gassah 10]

In addition, Ray's labeling the counter-trend reaction with XABC and using AB to generate the ME. C cannot accept beyond the ME if a spring is going to occur.

 

For the upside 5d breakout you'll have to re-label and in this case use the XA or XC as the boundaries which move the ME back above X.

[bigbird 10]

Dear Rob,

 

In addition, Ray's labeling the counter-trend reaction with XABC and using AB to generate the ME. C cannot accept beyond the ME if a spring is going to occur. For the upside 5d breakout you'll have to re-label and in this case use the XA or XC as the boundaries which move the ME back above X.

 

Thanks. Actually, I did not mention clearly enough that my question is really about how to label X, A, B to determine a "continuation-spring".

 

Okay, referring back to the post here, for 1.jpg, I would label 456 as XAB to determine whether a continuation-spring has happened, rather than labeling 345 as XAB. Similarly, for 2.jpg, 456 as XAB would be used for continuation-spring determination.

 

On the other hand, for upthrust determination, we should label 345 in 1.jpg and 2.jpg as XAB. Is that correct:question:

 

Thanks.

[gassah 10]

I find it easier keeping the labels as consistent as possible and using 345 as XAB. The other labeling Ray used is more of an anomaly. As long as you know 7 is springing 5 you're fine.

[dandelion 10]

Hi Rob:

 

Thank you for having this forum.

I have some questions regarding the relabelling of XAB.

 

I have attached 2 jpegs for my question.

Referring to pic1.jpg, first I label XAB. Then a higher high form at C with acceptance above ME. If the market retraces such that the price is

1. 1. 
      
   2. below A but at or above D, how should I re-label XAB?
      
   3. below D but above B, how should I re-label XAB?
      

 

Referring to pic2.jpg, first I label XAB. Then market consolidates and is followed by a breakout with WPC above ME at C. If the market retraces such that the price is

1. below A but at or above D, how should I re-label XAB?
   
2. below D but above B, how should I re-label XAB?
   

 

Looking forward to your reply. Thanx.

[gassah 10]

I have some questions regarding the relabelling of XAB.

 

I have attached 2 jpegs for my question.

Referring to pic1.jpg, first I label XAB. Then a higher high form at C with acceptance above ME. If the market retraces such that the price is

1. 1. 
      
   2. below A but at or above D, how should I re-label XAB?
      
   3. below D but above B, how should I re-label XAB?
      

 

Referring to pic2.jpg, first I label XAB. Then market consolidates and is followed by a breakout with WPC above ME at C. If the market retraces such that the price is

1. below A but at or above D, how should I re-label XAB?
   
2. below D but above B, how should I re-label XAB?
   

 

 

Hi dandelion,

 

I don't make a distinction between the two charts. Once a swing accepts below the PSZ of AB it continues to be considered a corrective structure. I wouldn't label either one D until it hits the 78.6%R, though I'm not absolutely certain Ray would agree.

 

Rob

[dandelion 10]

Hi Rob:

 

Thanx for your reply.

I am not too sure what you mean by "I wouldn't label either one D until"?

I might have been too brief in my questions. I have problems re-labelling XAB in order

to calculate ME, especially when market make higher high but retrace great than 78.6%.

I would like to rephrase my questions.

 

From pic3.jpg, I label cde as XAB to calculate the ME.

When higher high form at f with acceptance above ME, but market retrace to less than 76.8% of ef and turn up at g, do you mean that I can re-label efg as XAB to calculate the new ME?

 

What happen if the market retrace to more than 76.8% of ef and turn up at h, can I still re-label efh as XAB to calculate ME?

 

Similarly from pic4.jpg, in a consolidating market between def, I label cde as XAB to calculate ME.

When market breakout with WPC and acceptance above ME, but retrace to less than 76.8% of fg and turn up at h, can I also re-label fgh as XAB to calculate the ME?

 

How about if it retrace to more than 76.8% of fg and turn up at i, can I also re-label fgi as XAB to calculate ME?

 

Or should I just shift the blue line at d up to g and calculate ME using c=X, g=A and e=B?

 

 

Sorry for the repetition and thanx for your reply.

[gassah 10]

I'll address the first chart with different labeling. If it comes down to D at 78.6% AB and turns up and you want to see how price behaves around the PSZ and upper ME then I would change the boundaries to BC. If, instead, it continues down toward B then I wouldn't change it yet because you want to use the old PBZ and lower ME. If it then comes back up above the PBZ then I would change it to BC at that point.

[dandelion 10]

Hi Rob:

 

Is there a difference if it comes down to D at 78.6% of BC instead of 78.6% of AB?

How should the price behave around the PSZ and upper ME for me to change the boundaries to BC?

 

Thank you for your replies.

[gassah 10]

Is there a difference if it comes down to D at 78.6% of BC instead of 78.6% of AB?

 

I need to make a correction. CD does not need to come down to 78.6% of AB in order to label it a sideways market and to make changes to the ME. All it has to do is have a one bar acceptance below the PSZ of AB (like an upthrust). If it turns up to challenge C then I'd change the boundaries from AB to BC. It doesn't matter how it goes up. What I said about changing the boundaries if it continues lower still applies.

 

If it comes down to 78.6% of BC but stays above the PSZ of AB then you just have a continuation of the uptrend. The BC measurement does come into play with running corrections and R0 patterns. I don't think running corrections are in the book. I can try to explain them from Ray's webinar if you are interested.

[dandelion 10]

Hi Rob:

 

Yes, I am interested to know about running corrections. I saw this term in Ray's Blog, but could not find in the book. Thought I slept through a chapter....

How do we go about doing the explanation from Ray's webinar?

[bigbird 10]

Hi Rob,

 

The BC measurement does come into play with running corrections and R0 patterns. I don't think running corrections are in the book. I can try to explain them from Ray's webinar if you are interested.

 

Do you have a link to his webinar? Do you need to pay for it?

 

Thanks.

[gassah 10]

Do you have a link to his webinar? Do you need to pay for it?

 

The webinar is over a year old now and about 20 sessions. He might offer a discount. I'd ask his assistant Kwok @ oikwok@gmail.com.

 

Rob