GBPCHF - Perfect Long

It looks like Hurst Exponent is indeed improving my confidence in the trades. (While CLM3 is still running, here is the GBPCHF trade that I took on yesterday evening. The gray/red/green lines are entry/stop/target levels.

GBPCHF Chart - Long Trade Analysis

While Stochs at times showed signs of price dropping (and evident from the two bars that formed the higher low), I held on to my trade.

In hindsight, this is wave 4 of Wolfe wave. There is still a bit of meat to take away from this trade, to ride it short. But for that, we need to wait for hurst to give us an indication of volatility (turn blue).

Stochs currently points to overbought level, but I think its just consolidating price in the current levels.


About Hurst: Notice again how during the 'Blue' period of Hurst, we see more of an upward push. I'm starting to think that whatever the dominating move will be during the volatile period in hurst, that will prevail once the market starts to trend again. This means, we cannot blindly go short on GBPCHF right now because Hurst still shows that there is a bit of upward move left (despite what Stochs say).

Next update... when CLM3 hits the target (its day 2 now and price is ranging, which is getting to be a bit frustrating).

Is Hurst Exponent the answer to false breakouts?

While i'm on the case for Light Crude Oil futures, wolfe wave, I want to touch upon a small discovery. Recently, I stumbled upon Hurst Exponent indicator. While i'll keep the mathematical details and its history away from this article (and you can just search for hurst exponent, should you be interested to learn more), I find this indicator to be quite an interesting addition when trading with Wolfe Waves.

Simply put, the Hurst Exponent is not an oscillator but rather gives probabilities of price action. So when Hurst is above 1.5, it indicators volatile markets, and when its below 1.5 it indicates a trending market.

What's important to note from Hurst indicator is the aspect of 'volatility' or 'choppy markets'

Those trading with Wolfe Waves or converging triangles would know how easy it is to get caught in a false breakout.

Well, fret no more because I think using Hurst can help you steer away from these choppy movements.

Look to the chart below and the vertical lines.

Hurst Exponent - Wolfe Waves

The indicator below is a variation of Hurst exponent, which I modified a bit more to make it more easy on the eye.

We're looking at the 1-hour chart and pay attention to the price action when Hurst was above 1.5, indicating choppy markets. Isn't it interesting to see that Hurst is blue just within our region of the wolfe wave pattern?

Also note how the choppiness ends just when price touches our 'sweet spot' and then moves down (as we expect it to) ????

While its too early.. i'll be playing around more with the Hurst exponent and wolfe waves and see how this indicator helps.