Nofri Congestion Phases

Eugene Nofri was a floor trader in the corn pit for many years. In 1976, he wrote Success in Commodities: The Congestion Phase System. Mr. Nofri identified 32 congestion phases. All of them were varieties of a form similar to Figure below. When two bars in succession go down (or up) and the next two bars in succession go up (or down) and the fourth bar is within the range of the combined range of the first two bars -- the fifth bar will be back in the direction of the first two bars.

[caption id="attachment_13286" align="alignleft" width="370"]Nofri Congestion Phase Paradigm Nofri Congestion Phase Paradigm[/caption]

This is another of those systems developed for commodities that could use more study for currency trading.

Tip: In 2004, I did a statistical study of Nofri congestion phases for 24 months of three FOREX pairs.

Predictive correlations were higher in some than in others, although none was as high as I had hoped. I did find when the fourth bar also ended at or near the Goodman swing TP of the combined first two bars, the predictive percentage for the fifth bar went higher. This is an example of how two tools can be combined, or one can be used as a filter or overlay for another.

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 2016. Content published with author's permission.

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