R OBERT

K RAUSZ ' S
JOURNAL Volume 1, Issue 6

THE DYNAMIC RANGE TM

T his issue was held

back so that the
first of two new
tools could be ex-
plained to you. These new tools have been in-
onto the Dynamic Range. At first the Dynamic
Range technique may appear to be complicated,
but as with all new concepts a little work and
they become simple in practice.
The Fixed Range has been around for ap-
corporated into the latest version of the Fibonacci proximately sixty-two years. Charts 1 and 2 show
Trader program. If you haven't yet, please visit an application on an intraday chart and a daily
our Web site and download the latest version chart respectively. The usefulness and the valid-
(V3.03). ity of this tool is borne out by the fact that sixty-
This and the next issue are totally dedicated two years later it is still in use. That's unusual in
to these tools because I consider them useful and our industry where indicators go in and out of
important. This issue will take a close look at the fashion rather fast.
Dynamic Range technique and the next issue will To take the Fixed Range concept and make it
look at the Ergodic Candlestick Oscillator (ECO). dynamic is not only new but it introduces a new
It's pronounced er-god-ik. This latest technical tool paradigm to the energy point levels based on the
was given to us by my good friend Bill Blau. In traditional usage of the Pivot Point and Support
fact, future issues of the Journal will keep referring & Resistance levels. I can talk about this till break-
to them, helping you to include one or both of them fast, but only your own eyes an see its usefulness.
in your trading plans. We'll begin with a general Once you carefully observe the Dynamic Pivot (DP)
comment about the Fixed Range, and then move and the other Dynamic lines in real time will you
Fibonacci Trader Journal Page 1 Volume 1, Issue 6
realize the power of this tech-
Fixed
nique. That is why I intend to fol- Resistance 2
Tomorrow's Fixed Pivot (FP) = Today's (high, low and close)/3
low up on the application of the Fixed Support 1 tomorrow = FP - (Today's High - FP)
Fixed
Resistance 1
High
Dynamic Range in future issues Fixed Support 2 tomorrow = FP - Today's Range

of the Fibonacci Trader Journal. Fixed Resistance 1 tomorrow = (FP - Today's Low) + FP
Fixed Pivot
Fixed Resistance 2 tomorrow = Today's Range + FP Close
Of course, to see the effect
Low Fixed Support 1
clearly you should have both the
Fixed and the Dynamic on the Fixed Support 2

same chart. In a few moments

we will take a look at this com-
bination.
Let's look at the Fixed lines
first. We'll look at an intraday Chart 1: June 99 T-bonds 50-min/Daily/Weekly Plan. For tomorrow's Fixed
lines we use today's high, low and close. The calculations are set (fixed)
chart first, a 50-minute/Daily/ for the next day.
Weekly plan for the June 99 T-
bond contract (Chart 1). Click on Week B

the HPZ button on the FTTools Week A

Fixed
Resistance 2
toolbar or click on Indicators on High
W
Fixed
the main menu. T Resistance 1
F

Fixed Pivot

A) Select High Probability Zones T Close

B) The period should be set to Next M Low

Fixed Support 1
Adjust the colors and line thickness
Fixed Support 2
of the Fixed lines to suit you. You
should have five lines on the screen
as per Chart 1 (Fixed Resistance 2,
Fixed Resistance 1, Fixed Pivot, Chart 2: June 99 T-bonds Daily/Weekly/Monthly Plan. For the daily bar's
Fixed Support 1, Fixed Support Fixed lines (Week B) we use the previous week's (Week A) high, low
and close. The calculations are set (fixed) for the next week.
2). Chart 2 is an example of the
Fixed lines applied to a Daily/ As I said earlier the Fixed which I am sure many of you
Weekly/Monthly plan of the June Range concept is based on the already know. For those of you
99 T-bonds. old floor traders calculation, who don't know the calculation,
Volume 1, Issue 6 Fibonacci Trader Journal Page 2
 here it is: First, you add together the high, low and is the addition of Resistance 2 and Support 2. This
close of today, then divide by three. This will give is obtained by taking 100% of today’s range and
us the Fixed Pivot Point for tomorrow. This point is adding it to the Fixed Pivot Point giving us Fixed
fixed for the entire next day, hence the name Fixed Resistance 2. Next, take 100% of today’s range
Pivot Point. and subtract it from the Fixed Pivot Point. This gives
The second step is to take today’s low, subtract us Fixed Support 2, for the entire next day (please
it from tomorrow's Fixed Pivot, and add it to the see Chart 1).
Pivot Point. This is tomorrow’s projected high, Use the same calculation we used for the 50-
which we will call Resistance 1. This Resistance 1 minute/Daily/Weekly plan for the Daily/Weekly/
is fixed, and is called Fixed Resistance 1. Monthly setup. In the case of the latter, we will have
Step three is to take the difference between a Weekly Fixed Pivot to calculate the fixed levels
today’s high and tomorrow's Fixed Pivot point. Sub- for the entire week to come (Chart 2).
tract this difference from the Fixed Pivot and this Chart 2 shows how the weekly high, low and
close sets up our fixed points for the next week.
F
Please follow on Chart 2. It is Week A's high, low
To t a ke t h e F i xe d and close that gives up the Fixed Pivot and the other
Fixed lines for Week B. To make our life simpler
R a n g e c o n c e p t and we will abbreviate all of these names as follows:
make it dynamic introduces FR2 = Fixed Resistance 2
a new paradigm. FR1 = Fixed Resistance 1
F
FP = Fixed Pivot
FS1 = Fixed Support 1
will give you tomorrow’s projected low, called Sup- FS2 = Fixed Support 2
port 1. This Support 1 is fixed for the entire next
day’s trading. DYNAMIC RANGE
Many people have claimed that they invented To apply Dynamic Range lines go to the Indicator
this calculation. Actually, I first saw it in a book by menu:
George Cole, published in 1936 (that’s correct, over
62 years ago). He said then that he did not know A) Click on Dynamic Range
where the calculation came from, but that he got it B) Adjust the period to N and length to 1.
from one of the old floor traders in Chicago.
Since 1936 there have been some variations on Please understand that the calculations are different
this theme, but the only one we are concerned with from the Fibonacci Zones, which will be covered
Fibonacci Trader Journal Page 3 Volume 1, Issue 6
 Week A Week B

Dynamic
Resistance 2

High

W Dynamic
M Resistance 1
T Close
T
Dynamic
Pivot

Low
Dynamic
Support 1

Dynamic
Support 2

Chart 3: June 99 T-bonds Daily/Weekly/Monthly. Here, both the Fixed (solid lines) and
the Dynamic Range lines (dashed) are plotted. Notice that at the start of the week
the the Fixed and Dynamic start at the same level on Monday.

DASHED LINES
SOLID LINES DR2 = Dynamic Resistance 2
FR2 = Fixed Resistance 2 DR1 = Dynamic Resistance 1
FR1 = Fixed Resistance 1 DP = Dynamic Pivot
FP = Fixed Pivot DS1 = Dynamic Support 1
DR2
FS1 = Fixed Support 1 DS2 = Dynamic Support 2
FS2 = Fixed Support 2
Dynamic
FR2 Resistance 2

DR1
Fixed
T Resistance 2
FR1
Dynamic
Resistance 1
Fixed
Resistance 1
Fixed
Pivot
FP
Dynamic
Pivot
DS1 Dynamic
Fixed
Support 1
FS1 Support 1

Fixed
Dynamic Support 2
DS2 Support 2

FS2

Chart 4: June 99 T-bonds Daily/Weekly/Monthly. Here is a continuation of the daily

bars of the June 99 T-bond contract with both the Fixed (solid) and Dynamic Range
(dashed ) lines.

Volume 1, Issue 6 Fibonacci Trader Journal Page 4

 FR2

DR2

FR1

DR1

FP

DP
DS1

FS1

DS2

FS2

A B C D E

Chart 5: June 99 T-bonds 10-minute/50-minute/Daily Plan. The angular direction of the Dynamic Pivot tend to show
the trending direction of the 10-minute bars. The steepness of the angle, or lack of it, between the Fixed and Dynamic
Pivot and Lines can be important. Notice the effect on prices when the DP, DR1 and DS! face the same direction.

in the next issue. Charts 3 and 4 on the left page The projected Daily Fixed lines for Monday (4/19)
here shows all of these abbreviations. are based on the day’s action on Friday (4/16) and are
fixed for the entire trading day on Monday. The Dynamic
SHORT TERM CONCEPTS Lines develop as the day progresses after the open and
Chart 5 helps us enter the world of shorter time frames. adjusts to the market on a tick by tick basis.
This is a 10-minute/50-minute/Daily plan for the June When the first few ticks come on the open the
T-bonds with the Daily Fixed Pivot, Daily Fixed Sup- direction of the Dynamic Lines appear to be very acute
port and Resistance lines and it shows the Dynamic angles. This is not a mistake, as the day progresses the
Range lines. Both sets of lines gives us useful infor- Dynamic Lines direction becomes clear after a few
mation. Please be aware that I try to use current charts 10-minute bars are on the screen. You will get used to
for illustrations, such as this, but sometimes I have to it after a few days.
pick a past chart to show a setup to make a point clearly. The fixed lines show you where they should be
Fibonacci Trader Journal Page 5 Volume 1, Issue 6
based on the previous day’s action. But the Dynamic point down and DS1 and DS2 point up. Already some
Lines show you where they are up to the moment. It is subtle points give information. Also if you look back
the difference between the Fixed and the Dynamic you will see it is unlikely that the price direction can
lines that supply us with useful information. turn without the Dynamic Pivot turning down.
Please look at day D (4/14). The market opens This is not a stand alone tool, so try combining
almost unchanged, below the Fixed Pivot. The Dy- this with the Dynamic Fibonacci Channel (DFC) us-
namic Pivot was below the Fixed Pivot (the angle is
F
pointing downwards) all day. In spite of the fact that
prices rose about the first third of the day to challenge The Traders that do the
the Daily Fixed Pivot, the Dynamic Daily Pivot stayed
below the Fixed Pivot point.
most work and thinking will
When you do a bar-by-bar backtest of the 10- reap the most benefits.
minute bars or if you watch this in real time, you will F

see my concept at once. I can only request that you do

this, but if you do not, then I have wasted my time ing the same concepts as before. Please see Chart 6,
passing on to you a nice private tool. As usual the which is the same 10-minute Bond chart as before.
traders that do the most work and thinking will reap The market was rising until Day A when the DFC
the benefits. As far as I am aware, the Fibonacci Trader Daily top band pushed prices back and flattened out
TM
is the only program with the Dynamic Ranges in in the 123-16 area. Note, at this point the Dynamic
real time. I have used it for years. Let's see how the Pivot (DP) plus Dynamic Support 1 (DS1) plus Dy-
"copy merchants" handle this one. namic Support 2 were still pointing up but note the
What else? The Dynamic Range lines do not al- direction of the Dynamic Resistance 1 and Dynamic
ways all face the same way. Look at day B. Lines Resistance 2 were already pointing downwards. Could
DR2 and DR1 angle downwards while lines DS2 and this be a warning?
DS1 slope upwards. The Dynamic Pivot is just above Yes, I know on day E the prices have hit the bot-
the Fixed Point. Guest what? Congestion trading for tom bands (the solid line) of the Daily DFC. But here
the 10-minute bars. Prices do not break to the down- we can see the difference. First, the DFC bottom
side until the Dynamic Pivot is pointing downwards band is still trending down and not yet leveled out.
and it is below the Fixed Pivot. There, a private tool of Second, all of the Dynamic Lines (daily) are still
mine is now in your hands — please use it wisely. See pointing down, roughly parallel to each other.
days C, D, E and F. Subtle, yes, but also dynamic.
And please check out how at DayB the setup is Chart 7 (shown on page 8) shows the S&P 9-
similar to congestion on Day D as the DR1 and DR2 minte/45-minute/Daily. The market was rising until
Volume 1, Issue 6 Fibonacci Trader Journal Page 6
 DR1
FR2

DR2 Daily Dynamic

Fibonacci Channel

FR1

DP
DR1

FP

DS1

DP

DS1

FS1

DS2 DS2

FS2
A B C D
E

Daily Dynamic
Fibonacci Channel
F

Chart 6: June 99 T-bonds 10-minute/50-minute/Daily Plan. On this chart the Daily Dynamic Fibonacci
channel is added. The market was rising until Day A when the DFC Daily top band pushed prices back
and flattened out in the 123-16 area.

Day B (4/13), the DFC top band turned down gently, was exactly on top of the Fixed Pivot. But on the
DR1 and DR2 point down, but DS1 and DS2 point fifth 9-minute bar the Dynamic Pivot dipped be-
up while the DP is slightly up. Does this look similar low the Fixed Pivot. Even though 2 bars rose back
to Day B on Chart 6 (the 10-minute T-bonds)? On 4/ up to the Fixed Pivot line, the Dynamic Pivot
14, Day C of the S&P chart, 4 of the 5 Dynamic Range stayed below the Fixed all day. Remember what
lines point down. Also note that the Fixed Pivot was I said earlier. The Fixed Pivot is where it should
challenged twice and held. Check out this day on your be by the projection based on yesterday’s range.
program from the open to the close. What do you see But the Dynamic Pivot is where it really is today
when you track the market bar-by-bar? following every live tick. It is the difference be-
On 4/14 there was a slight gap up on the opening tween the two that gives us important informa-
and for the first four 9-minute bars the Dynamic Pivot tion. It is very difficult to change direction intra-
Fibonacci Trader Journal Page 7 Volume 1, Issue 6
 FR2

DR2
FR1

DR1

DR2

Daily Dynamic
Fibonacci Channel
DP FP

FP
DR1

DS1

C
A B DP
DS2

DS2 FS1
Daily Dynamic
Fibonacci Channel DS1
D

FS2 E
DS2

D DS2

Chart 7: June 99 S&P 500 9-minute/45-minute/Daily Plan.

day unless the geometry be- stop the downside trend in its date charts. Issue 7, detailing the
tween the Fixed and the Dy- tracks, as it did this Friday. Does Ergodic Candlestick Oscillator
namic Pivot changes. this mean a reversal is guaranteed? will follow shortly.
Also the angular distance be- No, but if you were short from
tween the Fixed and the Dynamic Day B some profit taking is ad- I wish you super trading,
lines acts as a beam for price direc- visable. In future issues we will Robert Krausz, MH, BCHE
tion. See how on chart 7, Day E (4/ return to this concept with up to
F
16) DS2 is already well above the
The FIBONACCI TRADER JOURNAL is copyrighted and published by the:
fixed S2 and pointing upwards. FIBONACCI TRADER CORPORATION
DS1 is almost level and the other 1835 US1 South 119, Suite 352, St. Augustine, FL 32086.
three are all down. Nevertheless, Phone: 512-443-5751, Fax: 512-443-7119, www.fibonaccitrader.com

please note when a DS2 rises in This journal is for educational purposes only. Futures trading is a high risk
situation. This publication is not rendering any trading advice. Please consult
this manner, it is often enough to the services of a professional competent person.

Fibonacci Trader Journal Page 8 Volume 1, Issue 6