Forex Weekly Bias: Range Expansion vs. Midpoint Probability
By LawrenceForex majors has a very consistent characteristics across them all. Namely, the likelihood of tagging the midpoint of a week in the week right after. The overall statistics across all the majors suggest that it is a pretty good bet to look for mean reversion as the probability stands at more than 60%.
The problem, however, is more complicated than that. Simple backtest will tell you that the expectancy is slight better than a scratch only. How can this be true? What is missing here?
I will show you the criteria that really matters. The one that turns this into an edge you can depend on.
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Comments
Something I’ve never really looked at in much depth before. Thanks for the article. So how to use it then. Take the current USD/JPY, maybe a break above Tuesday HOD trades back to prev week mid as a trade idea? Too conservative waiting for a break of Tuesday HOD?
With kind regards,
MK
Next instalment =)
Such a tease!! 😀
First one already posted
Lawrence, when you say “Namely, the likelihood of tagging the midpoint of a week in the week right after” in the first paragraph, do you mean the midpoint of the prior week or the midpoint of the week right after? I’m assuming that, in order for there to be a ‘midpoint’, the week should have completed and you’re referring to the prior week’s midpoint.
you are correct.