The MIDAS Touch, Part 2 by Andrew Coles, PhD
Last issue, we looked at what the MIDAS formula is and how it can be applied to intraday charts. This time, we’ll examine the intraday application of MIDAS more closely.
Previously, I discussed calculating the MIDAS formula, an acronym for “market interpretation/data analysis system,” and how it can be applied to intraday charts. This time, I will discuss some of my observations concerning the application of MIDAS more closely to intraday charts.
1. The role of the previous day’s high and low. In writing
about MIDAS, the late technical analyst Paul Levine always identified the launch points of MIDAS as the swing highs and lows of trends, even though he stressed the importance of a launch point in terms of a major change in trading sentiment.
The latter is consistent with any swing high or low and not just with the swing highs and lows of the classic trend shapes we are familiar with. This is all to the good, since any competent daytrader knows that the concepts of support and resistance play a broader role in daytrading. Not only
is there a daily trend (if any) to be concerned about, but
there are also other key levels such as the previous day’s
high, low, and close, as well as today’s open and current
high and low. It is interesting to see how MIDAS curves
behave in relation to these additional areas where there
is a change to a new trading psychology.