36# Veleofx Method Trading system

Submit by Joy22 22/04/2011

Weekly Setup: The first chart I look at every DAY, is the Weekly chart to see where we may be heading for the coming week.

Make NO mistake, we still FOCUS on the H1-chart as we are intraday traders, but I hope to get you to see the golden link

between the weekly, 4-Hourly; Hourly and finally the entry-chart which is the M5. (once I transfer the Thread to a new heading .

Please note that I have "seperated-out" the 2 most important RSIs to prevent any form of confusion. These are the RSI -2 and

RSI-4. Very simple and very accurate.

I have added 3 only EMAs to finish off the chart and they are: 25 / 40 and 100. Once you have them up you will immediately see the obvious and it needs no further explanation. (Presently the GBP/USD is busy "painting itself into a corner" (CT = contracting triangle) before we will see some major moves imho.)

All you have to understand here is that the RSI -2 will give you the clue as to overheating and also when there is a directional change.

The important RSI is actually the RSI-4.

The important levels for the RSI-4 are 70 and 30 respectively.

Let us take a LONG scenario to explain how to read the RSIs:

The WEEK of February 10th, 2008, the RSI-4 comes back up from being underneath the 30-level (bottom window for better

visual effect). Secondly, the RSI-2 crosses the RSI-4 (in first window for visual) and we can now expect that the direction has

changed to LONG.

Further confirmation is the divergence on the RSI -2 and RSI-4 as marked with a Yellow-trendline in both windows.

Yet another confirmation is the fact that the price had "bounced-off" the 38% Fib retracement level and finally the 100-ema.

Looking at the SHORT scenario:

The week of March 2nd, closes with the RSI-2 being overheated @ 96,1% - a sure sign that a possible retrace is in the offing.

The week following we see that the price do continue higher, but closes 20 pips lower than the prvious week. The RSI -4 now

touches the 78.6% level from where it bounced the previous week and now drops. The following week sees the drop ensuing

and ends on the 23,6% level of the RSI-2. Also the previous 23,6%-Fib-level now as SUPPORT. Interestingly, the PRICE now

stays under the crucial 40-EMA and the ensuing weeks, that level is NOT broken.

This week the RSI-2 bounces off thew RSI-4 amd the RSI-4 is in the process of crossing the 50-line. Either the direction is SHORT for this week to come if it breaks the 23% Fiblevel @ 1.9767 or it may go sideways to complete the Contracting Triangle (or CT). Please remember this abbreviation - I am not one to use abbreviations, but this is one we can remember.

To see PDF File for for an explanation.

Rar file there are the indicators used for the method.
The template in figure is an example at 5min.