Click on the chart to enlarge it.
One very subtle yet important Ocean event related to this chart is how the NMA bands (shown as dashed magenta lines on price) have tightened down (pinched) during the mid-July period.
As mentioned above, utopia would be a methodology that identified precisely when a move is expected to begin, the direction of it, and the anticipated velocity and amplitude. NMC and NMC2 (along with other Ocean tools) do an admirable job for the first two items while the NMA Band Pinch is one of the Ocean indicators that can add the third.
Though not shown, the Ocean software library contains an indicator that quantifies the degree of NMA or Fast NMA Band Pinch to identify markets where the likelihood of abnormally large and swift moves exists.
As the NMC Cross Kiss was occurring the NMA band width was the lowest since mid-January (six months). That extreme tightening implied that a high-amplitude, high-velocity move could be expected at any time. With the directional and timing call provided from NMC this is as close to a perfect trade setup as we could expect.
A prior example of this same scenario had occurred in late April (left side of chart), when a Fast NMA Band Pinch had occurred just as an NMC ZeroHit buy setup was also happening. The result was an almost instantaneous 10% thrust in a 3-day period that generated the momentum to carry this market another 10% higher in the next 6 weeks.
With luck the current NMC sell setup and NMA Band Pinch will have a similar impact on prices, this time to the downside. In typical Ocean fashion we now want to roll down to a lower timeframe, hoping to find a similar setup where we can finesse the trade entry, ideally gaining a better entry price and further minimizing our risk.
(This is the end of Part 2. Go to Part 3.)
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