Constructing a nine-cell directional-ratio grid

What the nine cells score

A directional-ratio grid is assembled from nine cells. Long-term, intermediate-term, and short-term stance are each scored up, down, or sideways on the daily, 240-minute, and 60-minute charts.

The average-directional-index in this workflow is that nine-cell board. The directional-ratio is the tabulated count of the nine stance cells, used to see at a glance whether most horizons agree or conflict.

Candle windows and averages

Short-term direction is read from highs and lows over 5 to 18 candles, intermediate-term over 19 to 59 candles, and long-term over 60 to 200 or more candles.

Long-term currency direction is marked with a 144-period exponential average, while stocks, indexes, and commodities use a 200-period simple average. Short-term direction can be visualized with a 5-open/5-close simple-average cross plus an 18-period simple average.

Trend-setup versus countertrend-setup

A trigger is classed as a trend-setup when it matches the next-higher time frame and as a countertrend-setup when it conflicts with that higher-frame direction.

MACD is a twelve-twenty-six-nine close-based oscillator used to mark agreement or divergence versus price while a higher-frame stance is still forming. The relative-strength-index is a fourteen-period close-based oscillator used as a confirmation filter. A drop through the 50 line marks a short-horizon stance change after a local high.

Higher-frame flip, then lower-frame triggers

On the 240-minute USD/JPY example, MACD, a stochastic oscillator, and the 14-period RSI all diverged from price as the pair tested a 50 percent retracement near 118, after which the 60-minute short-term cell turned down.

The 14-period RSI crossing below 50 one candle after the 117.95 high on 15 October 2007 coincided with the 60-minute short-term cell flipping lower, after which sell triggers on 15-minute and 5-minute charts were treated as aligned with the higher-frame stance.

After a lower low on 15 October 2007, the S&P 500 futures 60-minute short- and intermediate-term cells turned down. The next session’s 15-minute sell triggers used a 5-open/5-close simple-average cross together with RSI below 50.

The grid is dynamic. On USD/JPY, a change in the 240-minute intermediate-term cell moved the tabulated count from 5 up, 4 down, and 0 neutral on 17 October 2007 to 6 down, 2 up, and 1 neutral on 18 October 2007.