Interbank Price Delivery Algorithm (IPDA) Data Ranges | D'onte Goodridge

IPTA stands for Interbank Price Delivery Algorithm which controls the price action on our charts. It is the sole reason we get the four phases of the market: consolidation, expansion, retracement, and reversal. IPTA is used by Commercial Speculators to move large orders in the market. IPTA creates shifts on the daily chart every 20, 40, and 60 trading days, known as the IPDA look-back periods.

 

 IPDA Look-Back Periods = 20, 40, and 60 Trading Days

Approximately every 20 trading days, new liquidity pools form on both sides of the market. Understanding IPTA will give clarity about which levels are significant to current price. IPTA is always working and exchanging orders every second. IPTA can be applied on a daily timeframe of the current trading day or the first trading day of a month. 

 

Before trading a new month, traders should follow three steps to gain insight in the market:

(I.) Visualize IPDA Data Ranges in Daily Chart

The first step you must follow is finding the first trading day of a new month. Next you count back 20, 40, and 60 trading days (TD) from the first trading day of the month. Last find the highest high and lowest low in each look back data range.

 

The above is the daily chart of British pound versus US dollar (GBPUSD). Currently we are in January 2023, and the first official trading day is Monday, January 2, 2023. That is the start. From here we look back 20, 40, and 60 trading days: back 20 TD = December 2, 2022; back 40 TD = November 4, 2022; back 60 TD = October 7, 2022. Now we have all our look back data ranges. We find the highest high (red lines) and lowest low (blue lines) in al three quadrants.

(II.) Create hypothesis were price might draw to based on Technical and Fundamental Analysis

Now that we have finished our chart activity, we will take a look at technical analysis, then perform fundamental analysis and gain macroeconomic data that can aid with insight. Last, bring together the two analysis techniques to form a hypothesis on what price should do in the near future. 

 

Every new trading month, I am asking myself two questions: 

 

(1.) Is price going to give me a quarterly shift, meaning change trends?
(2.) Or is price going to continue its current trend? 

 

I have no idea whether or not the market is going to continue its trend or make a quarterly shift during the new month. However, using the IPTA ranges, I am able to structure some story-line, especially around liquidity. Going into a new trading month, IPTA ranges can help to figure out where the large orders of liquidity are residing. One side of the market is going to be taken, whether that is buy side liquidity or sell side liquidity. Look for the highs and lows that are still intact. This is where the price algorithm is going to draw to.

 

 British Pound Forex Seasonality.

(III.) Consider Seasonality

Incorporate Seasonality for more insight going into a new trading month. Seasonality does not tell you when to buy or sell for the year but it does give a general sense of when to anticipate the high of the year or the low of the year or when a instrument may be going sideways for a month or a couple of months.

 

IPDA Library Example #1: Gold/USD vs IPDA.

 Primary driver of the market are Interest Rate Differentials (IRDs).
 

Reference:

D'onte Goodridge (2022) - IPDA Data Ranges (video)

D'onte Goodridge (2022) - IPDA Library Example #2 - #7 (videos)

Michael J. Huddleston (2020) - ICT Forex Price Action Lesson: Advanced IPDA Insights. (video)

Michael J. Huddleston (2017) - Quarterly Shifts & IPDA Data Ranges. (video) 

Pervasive Euphoria Across The Market | Lines on a Chart by Tom

The markets closed another week at record highs, with the S&P 500 up by 2.3%, the Nasdaq by 3%, and the Dow by 2%. [...] I want to share two charts that caught my attention: The first chart, courtesy of Sentimentrader, depicts the small speculator index at the bottom. The annotation succinctly captures the essence of the chart— "small speculators are all in." 

 

 Small speculators are all-in.

This mirrors my observation last week regarding fund managers being fully invested based on the NAAIM index. The alignment between market participants, both large and small, underscores the pervasive euphoria across the market.

 Tech leadership vs S&P 500 is at highs exceeding the Great Financial Crisis.

The second chart, from Bank of America Global Research, highlights the Technology leadership versus the S&P 500, reaching levels surpassing those seen before the Great Financial Crisis. This serves as an intriguing backdrop to maintain awareness as sentiment and positioning continue to stretch.

Quoted from:

TomTheTrader1 @ Twitter/X
Lines on a Chart by Tom - (Mar 24, 2024) - The Market & The Moon. 

 

This week’s NAAIM Exposure Index number is 93.22. 

Active fund managers are all-in.

 

 [Euphoriameter]

 

 [CNN Fear & Greed Index ]

 

 

 [McClellan Oscillator]

 

Gold Breakout - Target 2,530 to 2,700 | Peter L. Brandt

This is a FOR REAL breakout in Gold. Goldfinger points to a target range of 2,530 to 2,700.

 

Peter L. Brandt @ Twitter/X (Mar 06, 2024)

 

June is typically the lowest month for Gold. 

The graph is based on the average prices; there are times when June tops rather than bottoms. 

Buy dips around monthly pivot levels. 

Friday’s Commitment of Traders (COT) Report from the CFTC had an interesting point about gold. The big money "commercial" traders responded to the rally in gold this week by posting the biggest jump in years in their collective net short position. This marks this week’s pop as at least a short term price top.

There has also been a big jump in total open interest lately. Usually such events mark a blowoff top in gold prices, although occasionally they are seen at a breakout point.

 Curiously, though, the small speculators in the "non-reportable" category were not chasing this week’s rally, and instead they reduced their net long position. They have not been net short as a group since 2016, so the analysis task consists in evaluating their relative net long position as a group. Having the small specs feel scared by this rally says it has some enduring legitimacy, once the short term overbought condition can get worked off. 

Tom McClellan @ Twitter/X (Mar 09, 2024)

Gold vs COT

Source: Fibbo SR (Aug 22, 2016)

Gold + Silver vs COT

The latest Commitments of Traders (COT) report suggests Gold and Silver could see a pullback.
Source: Fibbo SR (Jul 03, 2016)

EUR/USD Long-Term Low

Ahmed Farghaly (Nov 18, 2015) - EUR COT Analysis: Historically highest net long positions of commercial traders at the Euro low in March 2015
suggest that a Major Bottom in the Euro is in, and a 7.6 Year Rise of the Euro is about to start (chart HERE).

HERE

Ahmed Farghaly (Nov 19, 2015) - 15.23 Year Cycle in EUR/USD

Shifted Eurodollar COT points to SPX Major High in August | Tom McClellan

Tom McClellan (May 07, 2015): I do not know why it works to have the EuroDollars COT data shifted forward by a year to see what the SP500 will do.  But after seeing that it has worked for several years, at some point we stop wondering about the “why” question, and start to accept that there really is something working here.

I should emphasize that the relationship broke down during the Fed’s QE3, the $85 billion per month program of expanding the Fed’s balance sheet which started in September 2012 and then tapered down to nothing by October 2014.  During 2013 the once-nice leading indication seemed to be inverted for a while, and then the two plots got back into sync again starting in late 2013.  That was a frustrating time since I had come to trust its message so much when it was working well in 2011 and 2012. That just proves the point that no indicator is infallible, and one must continue to pay close attention to what is going on, just to make sure that everything is working as it is supposed to.

With the relationship back in sync now, it is appropriate to look ahead to a top due this summer, and some ugliness for stock prices this fall.  Ideally the top is due in early August, but there can be slight differences in the texture of the ED COT pattern and the actual behavior of the SP500. More HERE & HERE

Update - S&P 500 vs Commercial's Net Positions in Eurodollars 1 Year Ago

Tom McClellan discovered that commercial traders' net positions in Eurodollar futures shifted one year into the future are very likely to forecast the direction of the US stock markets (HERE).  CITs are (+/- 3 TD * ):

10/18/2012 high
11/08/2012 low
11/29/2012 high
12/13/2012 low
01/03/2013 high
02/14/2013 low

* COT-data  is  taken  from  the  close  of business  on  Tuesday  and  then released on the following Friday at 3:30 PM ET for futures only. It is also released twice a month or every other Monday for futures combined with the figures for options.

STD Red Week (Oct 29 - Nov 2)

www.chartsedge.com

While the S&P 500 futures continue to test support at 1400, Wallstreet's floor markets will be closed on Monday as New York braces for Hurricane Sandy. 

However,  STD Red Weeks are usually trenders from Tuesday a.m. to Friday a.m., that is: Monday and Friday usually reverse the Tuesday - Thursday trend. 

We expect a short term high around Full Moon (that is inverted to Mike Korell's forecast). If the typical Red-Week Pattern plays out, the low of the week should print by Thursday p.m. - Friday a.m., and will be followed by another decline with lower-lows into the Election-Week. As outlined earlier, the ITD suggests the high (some Elliott-Wave #4 or #2) could be reached as early as Tuesday-Wednesday (HERE).

This week includes the last 3 trading days of October and the first 2 trading days of November during the 4th year of the Presidential Cycle, and the bias of the S&P 500 in the Election Year Seasonal Chart is up. 

S&P 500 Today = Eurodollar COT 1 Year Ago | Tom McClellan

In May 2011 Tom McClellan unveiled a sensational discovery:

There are some jewels in the CFTC's weekly Commitment of Traders (COT) Report:  ... Commercial traders' net positions in eurodollar futures shifted forward by one year foretell the the stock market.
... Let's pause a minute to let that deep point sink in. Commercial eurodollar traders seem to "know" a year in advance what the stock market is going to do.  It is not a perfect correlation, but it is a darned good one.  I'm not sure what makes this work, but I have seen that it has worked great since about 1997 ... The term "eurodollars" should not be confused with the exchange rate between the dollar and the euro (HERE & HERE).

Projected CITs for the S&P 500 are (since COT data is weekly, CITs are +/-):

09/13/2012 high
09/20/2012 low
10/18/2012 high
11/08/2012 low
11/29/2012 HIGH of the Year
12/20/2012 low
01/03/2013 high
etc. 

STD Red Week (August 6 - 10)

For previous Short-Term-Delta Red Weeks in the S&P 500 see also HERE

STD Red Weeks oftentimes are trenders from Tuesday open to Friday open.  Monday and Friday often reverse the Tuesday - Thursday trend. This is the STD Red Week's pattern:

Alex Roslin's - COTs Timer (Aug 4)
Smart Money Commercial Hedgers dump S&P 500, COT signal flips to bearish

David Hickson - Hurst cycles (Aug 4)
We are expecting the 80-day cycle peak to form in the US markets soon, after which there will be a fall into the 80-day cycle trough which is expected in late August.
[Hurst triad] lines are presently projecting a target for the peak of 1400-1420.

Mike Burk - Seasonality (Aug 4)
As measured by the S&P 500 August has been, by far, the strongest month of the 4th year of the Presidential Cycle. I expect the major averages to be higher on Friday August 10 than they were on Friday August 3.

www.chartsedge.com

www.alphee.com

www.astrocycle.net

The Nasdaq 100 ETF (QQQ) broke above resistance from the July highs
and remains in an uptrend, but a spinning top formed on Friday.
These candlesticks show indecision and the prior two foreshadowed
pullbacks within the uptrend [Arthur Hill]

STD Blue Week (July 30 - August 3)

For previous Short-Term-Delta Blue Weeks in the S&P 500 see also HERE

During July each rally has led to higher highs before being sold off by about 50 points. Each of the lows has been accompanied by positive divergences. Short term momentum ended last week extremely overbought. Various indications point to a small pullback before the stock market moves higher. Such a pullback might last for only one day. The FOMC is coming up on Wednesday, August 1st. Normally a new month brings in new money producing higher prices in the later part of the week, August 1-3. However, on Monday the market is likely to dip and then be alert for whether Thursday, August 2 will be a high or low. A pullback may only retest the 1350's to 1360 (HERE).

The latest COT-signals are bullish for SPX and silver, but bearish for NDX and natural gas, while copper goes to cash after two weeks bearish, and the 30-year Treasury bond goes bearish (HERE).

www.chartsedge.com

www.alphee.com

www.astrocycle.net

STD Green Week (July 16-20)

This week is a STD Green Week, since Monday, July 16th, and Friday, July 20th, are STD Green Days (HERE).  Green Weeks are usually directional. However, this one might see the high of the week as early as by the end of Tuesday.

The pattern on Monday, July 16, is expected to mimic last Thursday. Tuesday is a potential STD-inversion-day. On the intermediate-term Delta-scale (ITD), we expect a rally into July 18 +/-  =  ITD #8 HIGH  = MTD #2). As outlined HERE + HERE already, ITD #8 is likely to stay below the July 3-5 ITD #6 HIGH. 

The 4 Year Lunar Cycle suggests that this high will be followed by the immediate decline into late July-early August (= 180 TD LOW = 40 Week Cycle LOW  = 9 Month Cycle LOW) as the start of a multi-month decline. The 40 Year Cycle points to a high above the April-May highs. 

We already pointed to Mars opposing Uranus on July 18 HERE + HERE, and  since this is also a New Moon day, that day serves best as the week's major CIT.

STD Blue Week (July 2-6)

STD Blue Days are usually choppy and tricky to trade, and STD Blue Weeks are very much the same. Statistically look back, STD Blue Days and STD Blue Weeks are when you'll loose more trades. STD Red and Green days and weeks are much better for trends to work. You may wan't to take advantage of the 4th of July-holiday and go fishing this week. 

Monday - Tuesday, July 2-3, may turn out similar or inverse to Thursday - Friday of last week. Also compare past Blue Week patterns, especially 4 weeks and 4 lunations back.

The current COT-signal is bullish and so is the VIX (see below). 

July 3 is Full Moon; tidal CITs are June 29, July 4 and July 12. On the 4th of July the Earth will be farthest from the Sun (Aphelion).

2012-07-02 (Mon) = Moon @ Max S-Declination
2012-07-02 (Mon) = VEN 120° JUP [helio]
2012-07-03 (Tue) = Full Moon
2012-07-03 (Tue) = VEN 90° SAT [helio]
2012-07-04 (Wed) = Earth @ Aphelion
2012-07-05 (Thu) = MER 180° JUP [helio]
2012-07-06 (Fri) = MER 90° NEP [helio]
2012-07-07 (Sat) = VEN 60° URA [helio]
2012-07-07 (Sat) = MER 120° URA [helio]

www.chartsedge.com

www.alphee.com

Eurodollar COT Indications for Stock Market Tops | Tom McClellan

www.mcoscillator.com - February 03, 2012 

... For almost a year, we have known that a top was due to arrive in February 2012.  And sure enough, stock prices have been rising nicely in recent weeks as fulfillment of that expectation.

Now this leading indication says that things are going to get less fun for investors for a while. The next 3 months show a sideways to downward structure in the eurodollar COT data, and the implication is that the steep price advance that we have been seeing should transition to a more sideways market ...

Eurodollar futures COT chart (from last year) sees the S&P 500 correcting until June, but then rallying hard. The next major inflection point is due in early June, when this leading indication says that a big multi-month rally is due to begin. 

_____________________________________________

www.mcoscillator.com - May 05, 2011 

There are some informational jewels in the CFTC’s weekly Commitment of Traders (COT) Report, and sometimes in ways that most people would not imagine. This week’s chart looks at data on commercial traders’ net positions in eurodollar futures, but with a twist: that data is shifted forward by one year to reveal that it actually leads the movements of the stock market. 

... The term “eurodollars” should not be confused with the exchange rate between the dollar and the euro.  It refers to dollar denominated time deposits in European banks, and the term predates the creation of the euro currency.  Eurodollar deposits typically follow the LIBOR interest rates.

... I am taking data from the eurodollar market, and applying it to an analysis of the US stock market.  The key discovery that I made a few years ago is that the movements of the SP500 tend to echo what the commercial eurodollar traders were doing previously.  I played around with alignments to get the best fit, and found that a one-year lead time gave the best correlation.


Let’s pause a minute to let that deep point sink in.  Commercial eurodollar traders seem to “know” a year in advance what the stock market is going to do.  It is not a perfect correlation, but it is a darned good one.  I’m not sure what makes this work, but I have seen that it has worked great since about 1997.  It may help to understand that the commercial traders of eurodollar futures are typically the big banks, who are using these futures contracts to manage their assets and fund flows.  So what we are seeing in their futures trading are responses to immediate banking liquidity conditions, and those actions give us a glimpse of future liquidity conditions for the stock market.  These liquidity conditions are revealed first in the banking system, and then the liquidity waves travel through the stock market a year later.  But even if we cannot identify exactly what makes something work, after a few years of seeing that it does work we can learn to accept it.