A few weeks ago, I posted a long-term weekly US. Dollar/Swiss Franc chart that Shane and I had been watching and trading for more than five years to illustrate the concept of Price Discovery. I followed up that post with a 240 minute chart that bore a striking resemblance: A Median Line and its Parallels gave many high probability trade entries on each chart. Eventually, price plunged lower literally vertical on both charts, reaching the Lower First Warning Line in one Wide Range Bar.

When price goes vertical, it is in its ‘Price Discovery’ phase, especially when it has traded past all the normal sign posts of support or resistance. Dr. Andrews gave us several tools and insights that help us project the Probable Path of Price, tools that are ‘Leading Indicators’, unlike 99.999 percent of the indicators most traders rely upon.

This is a follow up from our earlier live session on Linkedln. I thought we could follow it out here in the blog as we read this market and think about trade management. 

We will follow the probabilities of our Median Line tools as well as look for other entries. Its a new market without much history to the left. All things are possible as it goes through the process of price discovery. 

I’d like to follow up on my recent post regarding Price Discovery: When price finds itself in uncharted waters and you, as a trader, have little or nothing that looks or feels familiar to help you gauge where price is going and when it is likely to go…well, that’s the problem, isn’t? The signposts are gone.

The last post featured the weekly U.S. Dollar against the Swiss and an incredible vertical sell off of the U.S. Dollar that had reached roughly 70 cents against the Swissy – an incredible move by any measure.

Price fluctuates – It is the nature of everything in this universe. The universe is alive and change is the nature of everything. Eighty years ago, Dr. Andrews developed a methodology that allows us to the most probable path of price, in advance; he stated that this methodology worked on ‘anything that fluctuates, in any time frame’.

In our methodology at Market Geometry, we use market structure like Swing Highs and Lows, Lines of Balance, lines that plot out where a Change in Behavior  may occur, areas that show signs of significant buyers or sellers [Whale Tracks] and of course, the two tools pioneered by Dr. Andrews at MIT: Action Reaction Lines and Median Lines. I am one of the few remaining students from Dr. Andrews original ‘Inner Circle’, the Coral Gables Group, and so I know his work probably better than anyone else alive. But since adding emphasis on Market Structure, the other drawing tools I mentioned above and putting greater emphasis on the areas Whales are attracted to, I found my trading has improved dramatically. When I use all these tools together, I get a very detailed map of the most probable path of price-and generally find a handful of high probability entries on these maps.