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(Note: These are not necessarily in the same order as the rules we received from Murrey)
Before evaluating any chart, check the price spread between two Murrey lines. You want at least $1.50 for options trades (for stocks with prices around $50 or more), or 5% for stock trades.
The more of these rules that a stock agrees with, the more likely it is to be a successful trade.
1. Find the trend of the stock
Compare that to the trend of indexes, such as the OEX. Trade with the trend. The longer the trend, the better the chance of a reversal.
2. Look at all three trading frames
Use the 16-day trading frame for stocks and options. Make sure it agrees with the 64-day frame.
Use the 32-day frame for trading currency and commodities, and the 64-day frame for trading mutual funds.
3. Where did the stock close?
Look for the last candle to close within a baby 2/8 of a MurreyMath line. The most important lines are the 0/8, 1/8, 7/8 and 8/8. The range of the daily candle body should be no longer than one MM price spread.
4. What is today’s volume vs. yesterday’s?
If the difference is more than 25%, there’s a greater likelihood of a reversal.
5. Momentum lines
Is the stock running up or down along the 45° parallel momentum lines?
6. Speed lines
Is this stock trending on a MM speed line? Stocks reverse fastest off the 33, 45, or 78 angle speed line.
7. Circles of conflict
Look at the current movement of the candles as they relate to the circles. If the stock is moving in a counter-clockwise direction, it will likely follow that around the circle until it reaches the next circle, where the direction usually reverses. The center circle moves clockwise and the others move counter-clockwise.
8. Where does the stock enter the trading frame?
If the stock is entering near the top or bottom of the left side of the frame, there’s more potential for price movement than if it enters in the middle of the frame.
9. How many MM lines has the stock moved from its last reversal?
The last reversal does not have to be on a yellow or blue line. If the price of the stock is more than halfway between lines, start counting at the line furthest out. Stocks usually go up an odd number of lines and down an even number of lines. You’re looking for the line where the stock is likely to reverse.
The area between the 3/8 and 5/8 lines is “happy land” (no trade). We trade in the 0/8 to 1/8 and the 7/8 to 8/8 areas.
10. Time lines
The time lines are the vertical lines within the frame. The even time lines are the best time to buy because a stock is more apt to reverse on an even time line. The 6/8 time line is the strongest, and the 0/8, 2/8 and 4/8 are equal. But all the even time lines are stronger than the odd time lines.
11. Equities trades only: Confirmation from the previous day’s waist
To confirm a reversal, look for a stock to move beyond the previous day’s waist to enter the trade.
12. Options trades only: Reversal lines for options trades
When the stock price is above (or below) a line by more than 2 baby eighths, then the next reversal line is the one above (or below) the line the stock has just moved through.
1, what is the "baby" 2/8th? Isn't the baby 2/8th the MM 2/8th line? what is the different?
2, I have set the MM# labellevels and xard777 in 2 charts, but sometimes I found they were not in different level at the same TF, say, the labellevels is in 1/8 while the xard777 is in the 3/8. So which one, according to your experiences, should I trust or which one is better?
Since, according to Gann, prices move in 1/8's, these 1/8's act as points of price support and resistance as an entity's price changes in time. Given this 1/8 characteristic of price action, Murrey assigns properties to each of the MML's in an a given octave. These properties are listed here for convenience.
8/8 th's and 0/8 th's Lines (Ultimate Resistance)
These lines are the hardest to penetrate on the way up, and give the greatest support on the way down. (Prices may never make it thru these lines).
7/8 th's Line (Weak, Stall and Reverse)
This line is weak. If prices run up too far too fast, and if they stall at this line they will reverse down fast. If prices do not stall at this line they will move up to the 8/8 th's line.
6/8 th's and 2/8 th's Lines (Pivot, Reverse)
These two lines are second only to the 4/8 th's line in their ability to force prices to reverse. This is true whether prices are moving up or down.
5/8 th's Line (Top of Trading Range)
The prices of all entities will spend 40% of the time moving between the 5/8 th's and 3/8 th's lines. If prices move above the 5/8 th's line and stay above it for 10 to 12 days, the entity is said to be selling at a premium to what one wants to pay for it and prices will tend to stay above this line in the "premium area". If, however, prices fall below the 5/8 th's line then they will tend to fall further looking for support at a lower level.
4/8 th's Line (Major Support/Resistance)
This line provides the greatest amount of support and resistance. This line has the greatest support when prices are above it and the greatest resistance when prices are below it. This price level is the best level to sell and buy against.
3/8 th's Line (Bottom of Trading Range)
If prices are below this line and moving upwards, this line is difficult to penetrate. If prices penetrate above this line and stay above this line for 10 to 12 days then prices will stay above this line and spend 40% of the time moving between this line and the 5/8 th's line.
1/8 th Line (Weak, Stall and Reverse)
This line is weak. If prices run down too far too fast, and if they stall at this line they will reverse up fast. If prices do not stall at this line they will move down to the 0/8 th's line.
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1, what is the "baby" 2/8th? Isn't the baby 2/8th the MM 2/8th line? what is the different?
2, I have set the MM# labellevels and xard777 in 2 charts, but sometimes I found they were not in different level at the same TF, say, the labellevels is in 1/8 while the xard777 is in the 3/8. So which one, according to your experiences, should I trust or which one is better?
thanx for your time
asam
I think the difference is because Xard777 uses mainly a 32 period and the MM Label Levels default is a 64 period, so check the periods to see if they are different, I personally use a 64 period but the reccommendation for 4X is a 32 period. Hope this helps.
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