Market Environment Temperatures
Directional movement, volatility, price rhythm, and time rhythm may be analyzed in yet another manner. Experientially, for the purpose of forecasting, this classification can be further reduced to four temperatures: Hot, Cold, Warm, and Cool. Each can and should be considered as a distinct market or chart for the purposes of analysis. One may develop rules for each cluster, Hot, Cold, Warm, and Cool.
Every market may be defined as one of these types, quantified and analyzed. See Figure below.
[caption id="attachment_13278" align="alignleft" width="370"] ME -- ME Temperatures[/caption]
Tip: There is room for considerable research in ME temperatures.