Friedberg Direct - Price Momentum Monitor

Try a FREE $50,000
Simulated Trading
Demo Account

Up Coming Seminars

Subscribe for Newsletter

Risk Disclosure
Privacy Policy | Terms of Services

EDUCATION : PRICE MOMENTUM MONITOR

How The Price Momentum Monitor Works

There are 5 major components of the guide:

1. Currency Pair And Spot Rate When Analysis Is Conducted

2. Current Trend And Strength Of Trend

3. Whether Pair Is Overbought, Oversold Or Neutral

4. Recommended Positioning Based Upon Volatility

5. Support And Resistance Levels To Watch

TREND

There are 3 possible trends: Bullish, Bearish and Neutral

The strength of the trend is based upon an index of 1 to 100

The index is calculated based upon weighting of fundamental flows

and technical trend indicators

Readings above 20 should be reflective of a strong trend

*Index should rarely get above 50

How to use Trend indicator:

1. Identify trend

2. If trend is weak, use oscillator indicator to identify opportunity for range trade play

3. If trend is strong, look to only buy on dips in bullish trend or sell on rallies in bearish trend

4. If trend is neutral, conservative range plays recommended

OB/OS

There are 5 possible OB/OS conditions: Extremely Oversold, Oversold, Neutral,

Overbought and Extremely Overbought

The level of OB/OS is determined based on a mathematical weighting of

standard oscillators

Extremely overbought / oversold conditions will appear in red

How to use OB/OS indicator:

1. If the trend is weak based upon the index value and OB/OS is in extreme conditions > aggressive positioning for reversal play

2. If the trend is weak based upon the index value and OB/OS is in oversold / overbought > conservative positioning for reversal play

3. If trend is neutral and OB/OS is in extreme conditions > aggressive positioning for range play

4. If trend is neutral and OB/OS is in oversold/overbought conditions > conservative positioning for range play

5. If trend is strong, OB/OS signal not valid

Volatility

There are 5 volatility conditions: Position for breakout, Breakout environment, Neutral,

Range Trading Environment, Position for Range Trading

The volatility positioning recommendation is determined based upon a quantitative

comparison between short and long term volatility

Can be used independently or in conjunction with trend indicator

Extreme levels recommending positioning will appear in red

How to use Volatility indicator:

POSITION FOR BREAKOUT

1. If volatility reading is Position for Breakout, trend is bullish and strength is 20+ > aggressive position for a bullish breakout

2. If volatility reading is Position for Breakout, trend is bearish and strength is 20+ > aggressive position for a bearish breakdown

3. If volatility reading is Position for Breakout, trend is bearish / bullish / neutral and strength weak > conservative position for a breakout in either direction

BREAKOUT ENVIRONMENT

4. If volatility reading is Breakout Environment, trend is bullish and strength is 20+ > conservative position for a bullish breakout

5. If volatility reading is Breakout Environment, trend is bearish and strength is 20+ > conservative position for a bearish breakdown

6. If volatility reading is Breakout Environment, trend is bearish / bullish and strength weak > wait for a stronger signal

NEUTRAL

7. If volatility reading is Neutral, refer back to signals given by Trend and OB/OS indicators

RANGE TRADING ENVIRONMENT

8. If volatility reading is Range Trading Environment, Trend is bullish and strength index is weak and OB/OS indicators is extremely overbought > conservative short position

9. If volatility reading is Range Trading Environment, Trend is bearish and strength index is weak and OB/OS indicators is extremely oversold > conservative long position

POSITION FOR RANGE TRADING

10. If volatility reading is Position for Range Trading, Trend index is bullish and strength weak and OB/OS indicators is extremely overbought > aggressive short position

11. If volatility reading is Position for Range Trading, Trend index is bearish and strength weak and OB/OS indicators is extremely oversold > aggressive long position

Key Levels to Watch

Important Resistance and Support levels based upon proprietary calculations

involving volatility

Accuracy of Resistance and Support levels increases when volatility does not

change violently

How to use the Key Levels to Watch:

1. Can be used as reversal points in range trading environments

2. In trending environments, prices may bounce off those levels, providing short term opportunities to participate in trend

How Can the Price Momentum Monitor Help Your Trading?

There are many ways the monitor can be used to assist you trading depending upon what type of trader you are:

TREND TRADER

Look at Trend Index to Gauge Direction of the Trend and Strength of Trend

Look for Strength of Trend > 20

Strength of Trend > 20 → Increasingly Strong Trend Based Upon Number, Look to Go

With Trend Trading Strategies in Trend Direction Listed

Tips on using the Price Momentum Monitor:

If trend is strong, overbought and oversold signals not applicable

If trend is strong, volatility breakout more likely in direction of trend

RANGE TRADER

Look for Strength of Trend < 20 → Weak Trend, Currency Pair Most Likely to Remain

Range bound

Then Look at Overbought / Oversold (OB/OS) Signal:

- If Overbought > Short Bias on Range Trade

- If Extremely Overbought > Strong Short Bias on Range Trade

- If Oversold > Long Bias on Range Trade

- If Extremely Oversold > Strong Long Bias on Range Trade

Tips on using the Price Momentum Monitor:

Direction of trend not as applicable if trend is weak, but possibly stronger trade if direction

of trend is bullish and signal is Oversold or vice versa, if direction of trend is bearish and

signal is Overbought

If trend is weak, no clear direction on any volatility breakout signals, be wary of

false breakouts

BREAKOUT TRADER

Look for Volatility Signal to Say Position for Breakout or Position for Range Trading

If the Trend Index > 25, look for a breakout in the direction of the trend

If the Trend Index < 25, there could be a breakout in either direction.

These services are being made available exclusively to Friedberg Direct clients. To gain access, OPEN AN ACCOUNT, whereby you will receive a real (live) account user ID and password which will give you access to these services. - Demo user ID and passwords will not allow access.

There are no charges to open an account and you do not need to fund your account until you are ready to begin live trading. Utilize these services in conjunction with your Demo Account and take it for a test drive.