Some of my thoughts + Trading System

We had a whole candle close above 75% of W 40.2, but the reason why that happened is:

[B]“Rumors in the market of a U.S. Naval vessel struck by an Iranian missle”[/B]

*The dollar just sold off on vague rumors of US action in Iran. The rumors are variously that there has been some kind of contact between US and Iranian naval vessels in the Persian Gulf or that the US is going to take some action in the near future. Looks like the story has run it course and the dollar-selling/Treasury buying has run its course.

*US officials denying Iranian conflict rumors

*US officials saying Iran story not true

*The rumor was that Iran had launched a missile strike against a US nay ship, now being denied by Pentagon official via Reuters

My bias is still short and i consider this termination signal negative as it was largely emotion and news influenced a spike of fear and confusion.

Some people who were short, got scared by the news, thats all.

Regards,
E. Lang

GBP/USD Trade #2

CHART 3

Active Wave 3:
H: 9738 L: 9635

ENTRY: 1.9714
SL: Currently Floating
CURRENT PROFIT: +25

We determine that a new wave is active by noticing a correction of a valid W40.
(At Least 40 Pips prior to the correction)

  • We redraw our fibonnacci levels*
  • We disregard the previous W40.2 fibonacci levels*

OUR BIAS: No one “whole” candle has closed over 25.0% Fibonnacci Level of the newly drawn W40.3 (40 Pip Wave) so we hold Short, until a whole candle closes over.

Regards,
E. Lang


The attached chart is also a possibility for W 40.1

GBP/USD

Daily Pivots: (S1) 1.9625; § 1.9673; (R1) 1.9744; More
Despite rising further to 1.9777, cable failed to stay firmly above 1.9750 resistance. Subsequent retreat has pushed cable to below 1.9675 minor support with mild bearish divergence condition in 4 hours MACD and RSI. A short term top should be formed at 1.9777 and further consolidation is in favor to follow with risk of pulling back towards 1.9587 cluster resistance (38.2% retracement of 1.9261 to 1.9777 at 1.9580. However, we’d expect downside to be contained above 1.9452 cluster support (61.8% retracement of 1.9261 to 1.9777 at 1.9458) and bring rally resumption.

On the upside, above 1.9777 again will indicate rally from 1.9261 has already resumed for next upside target of 1.9846 high and then 138.2% projection of 1.8090 to 1.9142 from 1.8517 at 1.9917.
In the bigger picture, correction from 1.9846 has completed after three waves down to 1.9261. Break of 1.9846 high will confirm that rally from 1.8517 has resumed. However, close attention will be paid to sign of loss of upside momentum and reversal pattern formation as cable approaches key cluster resistance of 2.0106 (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067).

On the downside, it will take a break below 1.9452 support to indicate argue that the whole rise from 1.9261 has completed and shift short term focus back to the downside.

Regards,
E. Lang


Elang,

Are there any rules to determine if it’s one continuous wave or two separate waves?

Thanks (dropped a vote in the box)

Dear Mirzyk,

It is very difficult to say.

It is just one of those things that you have to sense with an experienced eye.

I personally know a pro trader wo trades Elliot Waves and gets his waves wrong all the time, but that doesn’t mean his system doesn’t work or that he is a bad trader.

In cases like these we just need to realize our mistakes and take the best action to correct it and minimize our losses so we can safely get back on track.

Trade 2 (Short on GBP/USD) has been terminated as my stop was hit.

The wave which i should have drawn was longer as i said yesterday and quote:

"It is possible that we only have 1 Active Wave with H: 9777 and L: 9635 and not two ( W 40.1 and W 40.2 )

This would give us a 75 Short termination level of 9741."

Which means that the short position we took would have terminated about 4 hours ago approximately, with the current time being: 07:55 GMT

Please see the attached chart to understand what i mean.

Regards,
E. Lang


For today using the retracement system,

I’ve noticed 2 active waves.

I don’t have any positions open yet, i am just speculating as the price is at a very vulnurable level at the moment, totally overbought, yet with somewhat strange signs of a continuing rally.

I will wait for better entry signals.

Regards,
E. Lang

PS: Don’t forget to establish an awareness of the news for today:
Easy-Forex: The Financial Calendar



[U][B]We have 2 types of waves:[/B] Impulsive and Corrective[/U]

I am using a standard Elliot Wave cycle to try and more clearly define the difference.

The impulsive wave in red, is individual, it is independent - it is the RALLY or the DECLINE in a price.

Once an impulse ends it is followed by a correction and then another impulse and then another correction of that impulse and then another correction etc.

When the above is happening and we have impulses followed by corrections, we consider the current move to be healthy, whether declining or rising.

This is the way the market works, impulses are always larger than corrections and corrections are always smaller that or equal to a percentage of its impulse… a percentage like… 25%, 38.2, 50, 61.2… are you getting my drift ?

The correction is merely a price level at which traders decide to cash in profits - Since however there is two sides to the market, long and short, scared and greedy, confused and experienced etc… not everyone will take profit at that level, so the correction of the price is limited to a certain point… defined points we know as 25%, 38.2, 50, 61.2 etc.

A price movement is considered a correction ONLY if it corrects to a certain amount of the price.

For example if you have a bearish impulsive wave with a high of 1.100 and a low of 1.1:

  • It is ok to consider the new price movement a correction if it reaches only as far as 1.25 (25%) or 1.38 (38.2) or 1.50 (50%) or 1.61 (61.2) or even 1.75 (75%) [B]BUT[/B] if the price closes below 75% and moves further up, this is no longer a correction because it has reached price levels which are nearly or equal to reaching 100% of the previous move… this is not a correction

Corrections are just that: “they correct”, correcting in normal English does not envision absolutely emphasizing change, it means partially emphasizing and applying change, so a price movement which is which is corrected absolutely is not a correction of its impulse, but rather a whole new Impulse on its own.

It is possible to have 1 impulse wave then another impulse wave right after in such a case, but naturally the market moves firstly in an impulse and then in a movement that corrects that impulse to a Fibonacci level.

One more example:

Bearish Wave with H: 1.100 and L: 1.1

When the price corrects (upwards) it can reach:

[B]25%:[/B] Then start an impulse

This is an early correction meaning in my understanding that nobody hardly thought they should have taken profit and there is confidence that the decline will resume and still has much life

[B]38.2%:[/B] Then starts an impulse

This is the logical correction level that almost everybody asumes the price will bounce off it is closely watched by pros and newbees alike.

[B]50%: [/B]Then starts an impulse

This is normaly a very strong level and it is inbetween 38.2 / 61.8
"Some People" don’t draw a 50% leve, they just have 38.2 and 61.8 and they leave a gap inbetween, which they consider a level within which they will accept prices to be in a retracement area and would consider any price action there retracement relative.

This is useful as it is common for people to draw their Fibonacci levels from different points, consecutively ending up with varying retracement levels.

When you have a gap between 38.2 and 61.8 it gives you the opportunity to amass all probable retracement level differencials created by varying drawing techniques and to bring them within one stable retracement area.

[B]68.1%: [/B]Then starts an impulse

This is also a common retracement level. If the price fails at 38.2% people look for 68.1%

If a price breaks decisively out of 68.1%, you should start considering possibilities for this correction to actualy be an impulse and perhaps a new decline / rise… why ?

Because a rally is defined by: Higher Highs and Lower Lows, where as a Decline by Lower Lows and Lower Highs.

If a rally doesnt make a higher high, but stops rather somewhere inbetween its last correction and starts to decline AND ACTUALY makes a low below its correction or last higher low, you should wonder weather this rally is terminating.

Once again i stress.

RALLY = HH and HL
DECLINE = LH and LL

[B]75%:[/B] Then starts an impulse

At this point in time you should have taken the necessary measures to prepare yourself for a good exit or taking a loss.

Price movement around this level is dangerous and you should be as weary as a virgin chicken in a rooster-house :smiley:

If we have a close below this level we have a whole candle close (including wicks) below this level we are obliged to terminate our position.

Some would even terminate after a whole candle close below 61.8%

So… if a price corrects to 38.2 or 61.8 or in the gap between them and then moves up to 25% and closes a bove that with a good signal, it is ok to buy.

Vice Versa if a price corrects to 38.2 or 61.8 and keeps on moving down and closes below 75% it is ok to short.

These are simple guides synthesized from basic Elliot Wave and Fibonnacci principles, there is no magic.

Keep in mind that no matter how reliable a system is, you need to be weary of R and S levels.

I hope this somewhat helps Ahefner33
[B]Regards,[/B]
[B]E. Lang[/B]

PS: If you feel this post has helped you out with your trading or given you insight to a better trading attitude please reward it with a few modest Reputation Points.

More Rep Points = Happy Effi = More Posts = Bigger Brain… kapish ?

[B]GBP/USD DAILY REPORT[/B]

Cable strengthens mildly today but upside is still limited by 1.9777 resistance so far. As discussed before, the deep retreat from 1.9777 with mild bearish divergence condition in 4 hours MACD and RSI suggest a short term top is formed at 1.9777 and further consolidation is in favor to follow. As long as cable stays below 1.9777 resistance, risk remains for another pull back towards 1.9587 cluster resistance (38.2% retracement of 1.9261 to 1.9777 at 1.9580. However, we’d expect downside to be contained above 1.9452 cluster support (61.8% retracement of 1.9261 to 1.9777 at 1.9458) and bring rally resumption.

On the [B]upside[/B], above 1.9777 again will indicate rally from 1.9261 has already resumed for next upside target of 1.9846 high and then 138.2% projection of 1.8090 to 1.9142 from 1.8517 at 1.9917.

In the bigger picture, correction from 1.9846 has completed after three waves down to 1.9261. Break of 1.9846 high will confirm that rally from 1.8517 has resumed. However, close attention will be paid to sign of loss of upside momentum and reversal pattern formation as cable approaches key cluster resistance of 2.0106 (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067).

On the [B]downside[/B], it will take a break below 1.9452 support to indicate argue that the whole rise from 1.9261 has completed and shift short term focus back to the downside.

GBP/CHF Short Possibility based on the retraement rules.

We will see how it works out.

Regards,
E. Lang


Look at the first GBP/CHF chart, after retail sales came in the price shot up, yet it came all the way down to close right below 75%

Beautiful.

Look at the second GBP/USD chart we should short if it closed below 75%.
RSI on D1 is diverging downwards and price will follow with it too.

It is best to get in early.

Regards,
E. Lang



GBP/USD SHORT SCENARIO

Heads up guys and girls, we may have a pretty good reason to short around this level get ready.

Check out the chart.

I will update once more once we have a confirmation.

Regards,
E. Lang


GBP/USD Trade #3
SHORT

CHART 1

Active Wave 1:
L: 9706 H: 9747

ENTRY: 1.9711
SL: Floating
CURRENT PROFIT: 0

We determine that a new wave is active by noticing a correction of a valid W40.
(At Least 40 Pips prior to the correction)

  • We redraw our fibonnacci levels*
  • We disregard the previous W40.x fibonnacci levels*

OUR BIAS: No one “whole” candle has closed over 25.0% Fibonnacci Level of the newly drawn W40.1 (40 Pip Wave) so we hold Short, until a whole candle closes over.

Regards,
E. Lang


GBP/USD Trade #3
SHORT

CHART 2

Active Wave 2:
H: 9772 L: 9706

ENTRY: 1.9711
SL: Floating
CURRENT PROFIT: -20

We determine that a new wave is active by noticing a correction of a valid W40.
(At Least 40 Pips prior to the correction)

  • We redraw our fibonnacci levels*
  • We disregard the previous W40.1 fibonnacci levels*

OUR BIAS: No one “whole” candle has closed over 75.0% Fibonnacci Level of the newly drawn W40.2 (40 Pip Wave) so we hold Short, until a whole candle closes over.

Regards,
E. Lang


Impulsive and Corrective waves on the GBP Chart.

As you will notice, there was no Higher High on the last impulse, which is a bullish no-no and a sign of a failing Rally, the bears need to take out 9636 to confirm it though.

RSI is also diverging away.

I can’t help but be bearish.

Regards,
E. Lang


GBP/USD Trade #3
SHORT

CHART 3

Active Wave 3:
H: 9755 L: 9706

ENTRY: 1.9711
SL: Floating
CURRENT PROFIT: x

We determine that a new wave is active by noticing a correction of a valid W40.
(At Least 40 Pips prior to the correction)

  • We redraw our fibonnacci levels*
  • We disregard the previous W40.2 fibonnacci levels*

OUR BIAS: No one “whole” candle has closed over 25.0% Fibonnacci Level of the newly drawn W40.3 (40 Pip Wave) so we hold Short, until a whole candle closes over.

Regards,
E. Lang


Elang, the doc shows using small time frame for intra day trading 5M & 15M. I wonder if thesame technique will work on 30M.

I dunno Ram,

Give it a go i guess.

Let us know what your results are like.

Regards,
E. Lang

[B]I am currently not able to analyze the chart properly as i am not at my personal desk, but from what i can see here on the rough charts, our short position has been terminated and our hard stop of 50 pips has been taken out.[/B]

[B]Overall today was a loosing day.[/B]

[B]Using this sytem for the past 2 days we have been able to bag +175 on our first Long trade -20 on the second and -50 on our second, totaling to 105 pips in 2 trades.[/B]

[B][/B]
[B]Since i am new to this methodology myself even though it is based on simple Fibonnacci retracments, it seems evident now that it is pure suicide to trade against the direction of the trend.[/B]

[B][/B]
[B]At the moment the price is at a level which is vary volatile since thre is a massive battle going on between the bulls and the bears on who is [/B]
[B]going to take control of the price.[/B]

[B][/B]
[B]Althought i feel that my analysis is correct it seems this system is best used after a stable trend movement in either direction has been established.[/B]

[B][/B]
[B]For early entries near reversal levels i will continue to rely on my established experience and knowledge.[/B]

[B][/B]
[B]I will update more on how this system perform, but i feel id rather best wait for an established trend first.[/B]

Regards,
E. Lang

Thanks Elang. I have tried to rep you multiple times but the system will not let me. Its keeps stating to me I need to spread more reps to other members. Once the system lets me I will more than def. give you more reps.

ahefner33

GBP/USD

Cable continues to trade sideway below 1.9777 high today. At this point, with mild bearish divergence condition in 4 hours MACD and RSI, a short term top is likely in place at 1.9777 already. Hence, further consolidation is in favor as long as cable stays below 1.9777 high. Risk remains for another pullback towards 1.9587 cluster resistance (38.2% retracement of 1.9261 to 1.9777 at 1.9580. However, we’d expect downside to be contained above 1.9452 cluster support (61.8% retracement of 1.9261 to 1.9777 at 1.9458) and bring rally resumption. Above 1.9777 will indicate rise from 1.9261 has resumed.

In the bigger picture, correction from 1.9846 has completed after three waves down to 1.9261. Hence, further rally is expected to follow to 1.9846 high and then 138.2% projection of 1.8090 to 1.9142 from 1.8517 at 1.9917. But, close attention will be paid to sign of loss of upside momentum and reversal pattern formation as cable approaches 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067).

On the downside, below 1.9452 cluster support will argue that price actions from 1.9846 is developing into extended consolidation and will shift focus back to 1.9177 cluster support (50% retracement of 1.8517 to 1.9846 at 1.9182, 23.6% retracement of 1.7047 to 1.9846 at 1.9185).



Retracement rules would say long when a whole candle closed over 75%, but considering that we have 9777 Reistence just up ahead i am sort of reluctant.

Perhaps the best thing to do would be to find another active wave above 9777 and wait for a long signal there.

Its just difficult to trade around these levels, where nobody knows yet if we have a TOP and a reversal or a rally resumption.

Either way… we need to wait for now.

Regards,
E. Lang

PS: The currently active wave is bearish or a downwards wave, and since the price retraced to 75% of it and closed over 75% we call the active wave a corrective one AND a corrective wave is always in the OPPOSITE direction of the main trend. So if it is facing down, then the main trend should be up.

Once you have that information you check your DAILY RSI and other indicators to confirm if the trend is up (RSI > 50), if it is, then this system says you are ment to long, but like i said before, im reluctant considering 9777.

UPDATE:

You will notice on Chart 4 that i have drawn a new active wave, for us to continue holding our long this active wave needs to be defined as an upwards impulsive, which means its retracement should reach 38.2 - 61.8 and then pop back up in an impulse all in all forming One impulse upwards, one correction downwards and one more impulse upwards.

We wait and see.