You may already know about this but I thought I would share it again for the whole board in case someone missed it last time I threw it out there. Credit for this goes to Craig Harris.
If you look back over pretty much any chart out there, you'll find certain numerical levels where price is drawn to over and over again. These translate into key levels for price action and can be of real benefit when looking at entries and exits on trades.
Craig calls it the Big Number system. Basically, it works like this...
The key levels for the Big Numbers are 00, 20, 50, and 80. Let's say we're looking at an EU level for example. 1.35 even would be a 00 level...dead even on the whole number. 1.3520 would be the next level and so on and so forth.
The market pays close attention to each of those levels, especially the 00 and 50.
In between those levels, we have what we call the Medium Numbers. Those are levels in between the big ones. Those levels are 15, 35, 65, and 90.
Here's how it works. Let's say you have a pair that's been bouncing back and forth between 00 and 20 in a tight channel at the bottom of a trend. If the pair manages to push above 20, then it would automatically head to the next level at 35. But here's the key...once a pair breaks a level, either a big one or medium one, we automatically need to start looking for targets TWO levels away.
So let's go back to our example. If the pair finally breaks above 20, we count 2 levels up. The first is 35 as a medium number and the next level is 50 at a big number level. So a pair that's been consolidating between 00 and 20 would very likely move to the 50 level once 20 is broken as resistance.
Now let's move to NU as a live example. This is why I had 0.8265 set as an exit yesterday on any long position. I got in too early but that's normal for me...LOL!
You can see at the bottom end where NU finally hit close to the 0.8220 mark. Then it bounces. But 0.8235 was serving as resistance based on prior price action. But notice that after NU bottomed just below 0.8220, it managed to finally break above 0.8235. Then price action came back down to test 0.8235, this time as support. So 0.8235 was the key level to break.
Now, we need to count 2 levels above 0.8235. That gives us 0.8250 first and then one more level up would be 0.8265. That's where I derived my target from.
This chart is the same one I posted last night. Notice the consolidation zone in green. That zone serves as resistance. We hit the zone perfectly at the bottom and the price turned right back down again. That's why I took the exit there. I was expecting that level to provide at least near term resistance.
The maximum target of 0.8290 I mentioned is the top of that resistance zone. That's also where the hourly EMA62 is waiting to push it back down currently. So I took the conservative exit to make sure I got out. Very little risk that way.
For another example of this big number system, just look at the green consolidation zone that now serves as resistance. It moved back and forth between the 90 level and the 65 level before finally breaking down. The market respects these levels with a high percentage of reliability.
So now we wait. For me to take another long position, it's gonna require that NU break above the green zone and then move back down to test it as support. That would take us up to the bottom of the next zone I have marked with the yellow dashed lines. The bottom of that zone is sitting at 0.8342...really close to that 35 medium number level. So a long position on a breakout above the green zone would give me 0.8335 as a TP target there.
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