April 18, 2009 - PART 4
This is a continuation of part 1 -3. You need to read part 1-3 in sequential order to understand this part.
In part 4, we will address the question of how GBP will move assuming that:
A. ITD 8 / MTD 11 was due on April 16 at 1.5067.
B. LTD 15 is NOT DUE together with ITD 8 / MTD 11
C. SLTD 2 is ALREADY IN at LTD 14.
Here's Delta rule and logic with the three assumptions above:
We should expect the end of MTD 12 to be at least lower than ITD 7 low (lower than 4580), but NO LOWER than MTD 10 (no lower than 3650). The reason it can't be lower than MTD 10 is because LTD direction is still UP, and so we must have higher MTD highs, and higher MTD lows in between LTDs.
Attached chart shows possibility of what could happen in medium term (MTD) time frame. Remember Delta does not predict price level, so MTD 12 for example may not end that low per my chart. Delta rule only states that price has to be lower than ITD 7 low and it has to be higher than MTD 10, but it doesn't predict price. It however gives us an idea of general price movement and key price level.
