The Hurst Trader

I keep writing all sorts of nonsense on this blog, but the one thing I haven’t got to yet is what the software is doing right now. That’s because I’ve thought I needed to prepare the ground, explain things, describe the trading theory at length … but instead I’m just going to take the plunge. Pictures say it all:

This is a chart of the Euro-USD exchange rate, produced by the software, analysing data up to Friday 30th May 2008.

• The thick BLUE line is the “price” line – the exchange rate between the two currencies.
• To the right you will see the price scale, with the closing price of Friday 30th May highlighted in a red box – it is red because the price has FALLEN (is lower) from the previous day’s closing price.
• The thin multi-coloured lines are the lines Hurst calls FLD’s – Future Lines of Demarcation.
• Price is surrounded by a “dominant channel”  the purple dotted lines that form an envelope around the price movement.
• Along the bottom of the chart is the last part of the phasing analysis for this chart. To the right you will see the cluster of small circles within lines, with a grey shaded background. This indicates that we expect a nest-of-lows within the next 7-10 days, with a strength of about 20 weeks.
• You will also see some VTL’s – Valid Trend Lines, as defined by Hurst. These are the straight dotted lines, with small boxed labels giving the wave period of the VTL.
• Notice also the TRIO of moving averages, moving around the price line. One is dark red, one blue and one green. These lines are not Hurst-inspired, but are a personal refinement by which I calculate refined FLD projections.

I’m not going to explain at length what this chart means because that would take several pages of discussion. For now I just wanted to give a glimpse of what the software is doing. Having said that, here is the commentary generated by the software, which pretty much does that for me:

Updated Phasing Analysis reveals that the dominant cycle has a wavelength of 16.9w, or 118 days. This is assumed to be the 20w nominal wave, which implies that all waves will be (-14%) shorter than nominal. This cycle is approaching a TROUGH (and a medium degree nest-of-lows). The underlying trend to this cycle is currently FLAT, likely turning DOWN. The future FLD indicates that this cycle will influence prices to peak in a short while, and then to fall.

The sub-dominant cycle (next wave down from the dominant cycle) has a wavelength of 58.9d, or 59 days. This is assumed to be the 80d nominal wave. This cycle is overdue for a PEAK. This is probably the second of 2 sub-waves. The underlying trend to this cycle is currently FLAT, likely turning UP. The future FLD indicates that this cycle will influence prices to peak soon, and then fall.

The pre-dominant cycle (next wave up from the dominant cycle) has a wavelength of 33.9w, or 237 days. This is assumed to be the 40w nominal wave. This cycle is approaching a PEAK. The underlying trend to this cycle is currently strongly UP. The future FLD indicates that this cycle will influence prices very little because despite near-term volatility the FLD becomes range-bound.

Σ L is currently FLAT. (value of: 0.0)

The last phasing analysis was 4 days ago. In that time price has FALLEN by 244 to 15521.
Sequence #1 of the previous pattern: Price did move DOWN (for 3 days) as expected and has moved towards the target of 14954. The closest price has gotten to this target so far is 15394 (2.9% short) 1 day ago. This target is now 38 days away.
This brings the price movement up to date. From this point on:
Sequence #1 is expected to reach a LOWER target of 14808(-146 diff) 4 days EARLIER, on 2008/06/12 Recent price action has generated a new sequence (# 1). The target of this projection is 13624, expected by 2008/10/06.

CURRENT PROJECTION PATTERN:
Price is currently range-bound (last close 15521), in an active FLD pattern cascading down. Price crossed below the 15 day FLD 1 bar ago, implying a price fall to 15467. This move would imply a price cross below the 29 day FLD (est: 2008/06/03 & level: 15498) projecting price to a CONGESTION PAUSE ZONE at approximately level 15436  Then price is likely to CONTINUE DOWN after a pause, towards fulfilling the 16 week cycle projection of 15402  taking price into a CONGESTION PAUSE ZONE at 15431 by about 2008/06/09  Then price is likely to CONTINUE DOWN after a pause, towards fulfilling the 59 day cycle projection of 15342  taking price into a CONGESTION PAUSE ZONE at 15429 by about 2008/06/09 . This price move breaks below the 33 week VTL implying that the peak on 2008/04/23 is the expected peak of the 15 month cycle. Then price is likely to CONTINUE DOWN after a pause, towards 14866 by 2008/08/09, attempting to fulfill the projection generated by the crossing of the 58 day FLD taking price into a CONGESTION PAUSE ZONE at 15257 by about 2008/07/03 . This price move breaks below the 16 week VTL implying that the peak on 2008/04/23 is the expected peak of the 33 week cycle. Then price is likely to CONTINUE DOWN after a pause, towards 14522 by 2008/11/09, attempting to fulfill the projection generated by the crossing of the 33 week FLD taking price into a CONGESTION PAUSE ZONE at 14782 by about 2008/10/05 . This price move breaks below the 15 month VTL implying that the peak on 2008/04/23 is the expected peak of the 46 month cycle. Then price is likely to CONTINUE DOWN after a pause, towards 13572 by 2009/07/15, attempting to fulfill the projection generated by the crossing of the 15 month FLD taking price into a FINAL REVERSAL ZONE

There is no cycle which provides an average potential of at least 20% per half-cycle, and so it is not recommended that you trade this stock unless you are trading on a leveraged basis, in which case you should change the Trading Settings by using the Tools|Trade Settings|Edit menu.

Having reviewed the entire projection sequence I am unable to find a move suitable for trading, and so no trades have been set up.

 Well – that’s what the software is “thinking” about the Euro-USD as of the 30th May. It seems pretty likely that things are going down, and that the upcoming nest-of-lows will generate little more than a temporary upward correction to the downward move. However it is early days for the software, and so I am by no means making any kind of call on this, I merely put it up here to show what the software’s doing at the moment.

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