DTAFM

DTAFM is a technique for financial analysis developed in 1993 by Philippe Cahen, DTAFM (Dynamic Technical Analysis for Financial Markets) is a technical approach for forecasting financial markets over a period ranging from minutes to several quarters.
Basis of DTAFM
Rising and falling prices are mainly due to the potential for higher volatility.
Specificity of DTAFM
The classical technical analysis and fundamental analysis are based on analyzing the past to forecast the future (which could be conceived in a static environment, but what is more the case in a world in profound change) The DTAFM concerns the anticipation of a future from the forecasting of exceptional information in the near future (which can overcome the environmental changes).
Basic
To observe an exceptional move on a financial asset, upward or downward, one must observe exceptional information patterns on our specific tools.
There are two kinds of tools with DTAFM: those related to volatility (60% of the weight of the decision to be short or long) and those observed on indicators of technical analysis (40% of the weight).
The propagation and the presence of exceptional information on a future time unit (dynamic analysis), identifies goals and measures the reliability of forecasts. Reading charts is done using a Triptych.
Depending on the quality of the operator -beginner, experienced, expert - and depending on the market-equities / indices, Forex, all futures markets and the duration- the presence and combination of such or such exceptional information allow to open a long or short position.
Management and close of position is based on a pattern formed by the Bollinger Bands: Bubble or Parallel.
Exceptional information
On volatility: is a close above or below a Bollinger Band, followed by a further move.
On a technical indicator, they are observed with a no-crossover between:
two arithmetical moving averages (7 and 23 periods),
a Lane stochastic and its moving average,
an Appel MACD and its moving average,
price and the J.W. Wider parabolic ,
in some cases, a cross-over between parabolic and Bollinger moving average
For an annual, quarterly or monthly time unit, a bullish or bearish divergence is also exceptional information.
Anticipating exceptional information
Volatility: new high after a close above the upper Bollinger Band or new low after a close below the lower Bollinger Band with minimal volatility.
Technical tools, priority to no-crossover:
With our 7 and 23 periods moving averages using a dynamic analysis of - 8 and - 24 closes Vs last close;
Stochastic, MACD and Parabolic by analyzing their environment.
Speaking DTAFM
No-crossover:

No-crossover between two moving averages (7 and 23 periods). Also no-crossover for: a stochastic and its moving average, a MACD and its moving averages, parabolic and prices.
Volatility:
In finance it is customary to speak of historical volatility and implied volatility. These two concepts are of no use in DTAFM. In our approach, volatility is measured by the difference, measured in percentage, between the lower band and the upper Bollinger Band. An increase or decrease in volatility is measured by the increase or decrease in volatility between two successive periods.
Minimum volatility:
Following a convergence of Bollinger Bands, it remains flat for a minimum of six periods. The gap between the two bands is less than or equal to that which preceded the last significant movement in prices (upwards or downwards).
Unit of time:
Price fluctuations, for a specific time, which are observed on a bar chart . By extension, they are charts and indicators relating to this period. There are 11 units of time between three minutes and one year. The dynamic analysis is based on the propagation of exceptional information on other time units. At a specific forecasting length of time corresponds a specific unit of time.
Triptych:

Set of three identical parts which cover different time horizons adjacent to analyze the spread of information and view exceptional stop-loss. The content analysis allows the volatility to determine targets and predict the presence of exceptional information to measure the amount of expected movement.
DTAFM patterns
Following a minimal volatility level, a close outside of a Bollinger Band:
Bubble:

When there is a close outside of a Bollinger Band and afterwards during the three periods, one or several bar-charts are outside of a Bollinger Band. Thereafter, the opposite band close will be flat for three periods or more.
Parallel:

When there is a close outside of a Bollinger Band and during the next three periods the bar charts cross a Bollinger Band. Subsequently, the band turns in the opposite direction by an obtuse angle.
Further reading
*Analyse technique et volatilité, Philippe Cahen, Economica, 2004, ISBN 2-7178-4759-6
*Dynamic Technical Analysis, Philippe Cahen, Wiley, 2001, ISBN 978-0471899471
*Bollinger on Bollinger Bands, John Bollinger, McGraw Hill, 2002, ISBN 978-0071373685
Notes and references
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