Murray indicator - trading features
The Murray indicator is a universal technical analysis tool based on the world-famous Gann trading tactics, the effectiveness of which has been appreciated by more than one generation of traders.
Thomas Murray significantly simplified the approach to trading by Gan levels, taking as a basis his fractal theory of market construction and, thanks to mathematical calculations, highlighting a coordinate system for each of the fractals.
Murray, like Gann, believed that the market consists of fractals that have different sizes but the same shape.
So in many textbooks you can find plotting a graph in the form of squares. According to Murray, the market consists of certain price fluctuations that can be squared.
Considering that each of the fractals is a separate whole from which the set consists, Murray created an indicator that marks important levels for each of the squares, and each is analyzed separately.
In the figure you clearly see the whole essence of fractal theory, and the extreme levels of Murray are the boundaries of a certain square.
Setting up the Murray indicator
Before you begin to analyze the features of the indicator and the method of predicting the price using it, you must first install it in MT4. To do this, download the file with the indicator and use the file menu to enter the platform data directory. You will see an MQL4 folder containing a folder called Indicators.
Drop the downloaded file into this folder and update the installed item in the “Navigator” panel. Considering that the tool is a purely mathematical approach to market analysis, it can be applied to any currency pair or stock, however, it is recommended to carry out analysis on higher time frames.
Move the indicator to any currency pair, but with a time frame not lower than hourly. You should get a picture like this:
Meaning and importance of each Murray level
Thomas Murray gave different meanings to his levels, and they are divided according to their influence on the price. Thus, the Support (0/8) and Resistance (8/8) levels are the strongest levels of all those presented on the indicator screen.
The most interesting thing is that these two levels are the boundaries of the fractal, which we wrote about at the very beginning. Most often, the price repeatedly bounces off these levels, but when they break through, the indicator will notify you about the formation of a new square, which will undoubtedly lead to a strong price movement.
Levels 7/8 and 1/8, which the indicator calls “Stop. Reversal" have an order of magnitude less impact on the price than 0/8 and 8/8 and are often ignored by traders. However, this particular level has the distinctive feature of showing a reversal during a strong price surge.
So, if the price slowly and gradually drops to these levels, then they act as a guide to further levels 0/8 and 8/8. If you observe a strong price surge and a price stop near 7/8 or 1/8, then with a high probability you should expect a reversal from these levels in the opposite direction to the main movement.
Levels 6/8 and 2/8 are called rotation or reversal levels. Unlike the previous levels discussed, they have little influence on the market, but often act as turning points.
The fact is that in front of these levels there is a price channel, after breaking through which the price tends to 6/8 and 2/8 and then tends to balance, pushing towards the center line of the channel.
Levels 5/8 and 3/8 are the top and bottom of the price channel that forms around the price with the central level 4/8. As with any trading inside a channel, its borders serve as a support for pushing the price to the opposite border of the channel, which undoubtedly gives a number of counter-trend signals for entering the market.
Level 4/8 is the main line of support or resistance depending on where the price is located. It is one of the most important levels at which various price reversals occur.
Murray's Regularities and Patterns
Many traders use this indicator as support and resistance lines depending on their significance, but few people know that the indicator draws various Patterns that predict possible price movements.
Pattern 0/8-4/8-1/8 with target 8/8
This pattern consists of three points at levels 0/8, 4/8, 1/8 which usually lead the price to level 8.8. The price does not have to stop at these levels; it is enough for the price to slow down a couple of points from these levels. To understand the essence of the pattern, I suggest looking at the image below:
Pattern 8/8-4/8-7/8 with target 0/8
This pattern is a mirror copy of the 0/8-4/8-1/8 pattern with a target of 8/8. An example of a mirror partner for entering a sell position is shown in the picture below:
Pattern 0/8 – 3/8 – 3/8 with a target of 4/8
The pattern is formed due to the contact of three important levels 0/8, 3/8, 3/8, the main goal of which is a price rebound against the main trend to the 4/8 level. Unlike previous patterns, the range of movement is much smaller, and the target is the middle of the range. For understanding, see the picture below:
A mirror copy of the pattern 0/8, 3/8, 3/8 with levels 8/8-5/8-7/8 with a target of 4/8. Example in the picture below:
In general, each trader chooses for himself how to use this indicator and build his own signals, however, if you want to trade strictly according to Murray, then patterns are the basis for entering the market using this indicator.