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 ME -- ME Temperatures[/caption]

Tip: There is room for considerable research in ME temperatures.

By Michael Duane Archer
Michael Duane Archer has been an active futures and FOREX trader for more than 35 years. He has worked in various advisory capacities, notably as a commodity trading advisor, registered SEC investment advisor, and branch manager for Heinold of Hawaii. He currently trades FOREX and futures and is involved in several technical analysis research projects.

Copyrighted 2020. Content published with author's permission.

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