Active-Trader - Voodoo Clues - Part One

Welcome back Active Traders and Wealth Builders.

As you already know, I'm too cheap to pay for indicators, particularly $997 for the Voodoo lines indicator plus $47 per month ongoing.  But in my recent experience, the hidden support and resistance lines expressed by the Voodoo lines indicator are just too valuable to ignore.

One of the reasons why I don't pay for indicators (or any of the training classes from Simpler Options either) is that I don't believe in paying for information which can be had for free.  This attitude may be holding back my development as a trader since I have an inner need to figure things out for myself.  As I mentioned in a prior post, the Voodoo lines present a particular challenge since they are so expensive and don't appear to come included in any charting packages like just about every other indicator out there.

Here's what we know about Voodoo lines so far:

1) They are calculated in part with human interaction
2) They are based in part on Fibonacci and/or Elliot wave principles

The above screen grab of Voodoo lines for the symbol SCTY grabbed from a Simpler Options video provides some important clues.  They confirm my first suspicion which is that Voodoo lines are an algorithmic extensions of a low which is selected by the human interpreter.  Note how SCTY ran up then pulled back to form an important  intermediate low which is the lowest red line.

 From that point forward the Voodoo lines are calculated as a sequence of 4 red lines separated by 2 inner lines in green.  The next questions to be asked are:

1) How is the distance between the red lines calculated?  Is it a proportion of the price level alone or a harmonic of the most recent high to the (human selected) low?

2) What is the distance between the red lines and the 2 intermediate green lines?   This one seems simpler to determine since once the red lines are calculated, the green lines to seem to be a fixed proportion between them?

As you can see, I love puzzles like this and I have made some important first steps here.

Check back later for part 2 in my quest to demystify the Voodoo lines indicator.