Is it possible to predict price movements?

Today I want to talk about price predictions. First of all, lets clarify what the elements of a price prediction are. Price moves from one location to another, so location or destination of a price movement is an important element. The second element is the way price is expected to move. One can predict movements with a straight line or with multiple lines indicating the elements of the entire move from one location to another. The third element is timing. When would all the moves take place for price to end up at a certain price level?

Now, from the above, you can see that all the elements should be right for a proper price prediction. Lets take a look at a prediction I made on the 20th of October regarding UJ. You can find the details here. It is a good example of how to predict price and what one can expect from such a prediction.

There are multiple issues that one should consider when predicting price.

One is the current location of price. I have multiple approaches to price movements to help me navigating the movements of price within the price cycle. I am a trader of price cycles but since there are multiple ones I consider functions of price movements, the variations of movements, timing and lots of other things. When we predict something, price is at a certain location, a level, completing some of its regular moves with fulfilling multiple functions. The accuracy of a prediction depends on current location and the functions of price movements at that location. It is because some of the functions of price movements take place within a longer or a shorter period of time. For this reason alone I would state that price prediction should be done from certain price locations only.

The second issue to consider when predicting price is the ways price could move to a destination. When predicting UJ price movement I said that a move could take place in a minute or days with the same effect. This statement holds an important fact about price movements. Movements do not care about your sitting in front of the monitor and waiting for it to move. When a move is due, you are either there or you are not there. However, when a move is done, the move is completed with all of its functions and by then price will have some other functions in mind to consider for its next move. Price moves but only because it moves slow or fast the move is a move.

So far we have learnt that there is a need to differentiate locations, functions and duration of a move. The third element of a price prediction is the destination of price movement itself. Is there one that can be indicated as a price level, an exact figure? Let me be very clear with price levels. They are not exact figures. A price level for a destination signifies an area only. Price might fall short of a predetermined price level or it might go beyond. To understand what to expect from a move one should understand when and how price reaches a “level” rather than blindly expect a U-turn at the “level” itself.

We all predict price movements either it is possible for an individual or not. Otherwise trading makes no sense. Prediction makes a lot of sense to me and I consider it highly possible. However, as you can see by looking at the UJ example, I am not overly keen to make a prediction that is carved in stone for the various reasons already explained. UJ has moved way more in terms of pips in 10+ days than the distance between the then current and the predicted price level making intra-day trading a more favorable activity. But what I really wanted to highlight today is that one should not be overly rigid with his or her prediction because there are many things at play when price moves and any lines drawn to predict price movements should be taken with flexibility and understanding of what price is capable of doing. Because of this, I also advise people to never share their predictions with others as it can very easily become an ego game.

That’s all for the day. Trade well!

A.