A System that can't Lose

[Sweet_Pip]

To project in advance where a wave C could end (where we’d want to open a trade), there are 3 sets of fibs that need to be drawn. For this we need the minimal setup conditions which means we need waves A & B. The trend pattern is contained within the larger grey triangle, and the projected end of the corrective pattern is the smaller grey triangle…oh look, it’s a Gartley!

Fib Set 1: Draw a fib from the beginning of the prior trend from point 0, to it’s end at point (wave) 5. This will give us the internal retracement levels (blue lines).

-The key levels are 50% & 61.8%
-38.2% is usually a temporary level of S & R.
-78.6% is usually the max retracement. Retracements past that usually means that this is no longer a correction.

Fib Set 2: Draw a fib from wave 5 to wave A. Now if you are using MT4, use the fib EXPANSION tool and anchor the third line to B. If you don’t, then you’ll have to physically move the 5-A fib over to B.

This gives us our alternate price projections levels by using the range of one swing and forward projecting it’s range onto the start of the next swing to project in advance where it might end (red lines)

Key level is the 100%
Rarely exceeds 161.8%

Fib Set 3: Draw a line from wave A to wave B to get the extension levels (green lines)

Key levels are 127.2%, 161.8% & 261.8%

End of Wave Projection

The picture I attached is the current Hourly AUDUSD with all 3 fib sets. What we are looking for are the key fib levels from each fib set to group tightly together…one of each color…lol.

Ok so now we analyze. In the order of importance, the internal retracements (blue lines) come first, then the APP’s (red lines), and then the extensions (green lines). Apologies for the smallness of the chart.

The grouping I circled is the tightest and includes a fib level from each fib set being

61.8% retracement (blue line) - that’s a key level
127% APP (red line) - key but 100% is more desirable
161.8% extension (green line) - a key level

Now the price didn’t quite reach it before it started moving up again. So what else do we see.

Prior to that zone is another very tight grouping.
50% retracement - key level
100% APP - key level
127.2% extension - key level

This would have been considered the probable target for a wave C end, and where we’d place our long trade. However, in this case, price did not end there and fell about 30 pips below heading towards the grouping I circled but didn’t reach.

Let’s see how this plays out a bit more…we’ve got 4 1/2 hours till the next scheduled news event that affects this pair…

[wrtm_19]

Sweet Pip,

According to this strategy, does this set up qualify as a good one?

It’s on the 4hr chart of Cad/jpy. I have My XA leg within where I think I can identify 12345 points.

My “C” (D) relies at 50% XA wich is a good set up, but I work with additional fib levels, in this case I have that convergence at 138,2% CD.

I really like this set up because it has three additional convergences at that point. and also “C” relies on the way of a main trendline.

I appreciate your comments.

[Sweet_Pip]

Sweet Pip,

According to this strategy, does this set up qualify as a good one?

It’s on the 4hr chart of Cad/jpy. I have My XA leg within where I think I can identify 12345 points.

My “C” (D) relies at 50% XA wich is a good set up, but I work with additional fib levels, in this case I have that convergence at 138,2% CD.

I really like this set up because it has three additional convergences at that point. and also “C” relies on the way of a main trendline.

I appreciate your comments.

Thanks for posting your chart wrtm. Unfortunately my IBFX demo doesn’t have that pair :(, so I can’t measure it up. It looks good, with the added trendline to bounce up from though

The exercise at this point is to identify the trend & corrective wave patterns, and while you know them quite well and how to apply the fibs, the importance of the 5 & 3 wave characteristics of the triangles wasn’t addressed by TMoneyBags.

Like you said, you’ll have to compare the results of your trades with this new twist…lol… and see if it makes much of a difference, along with the use of a momentum indicator’s position when price gets to the projected convergences.

As well, we still have cycles (time) to cover…

[mich]

Mich, you can configure your fib extension on dealbook so you can have all these set ups set as default for every time you draw your fibs.

Just right click on your fib, select configure fib levels, and there you go, you can add as many numbers as you want.

Hope that helps.

Thanks for the tip. Much appreciated.

Mich

[mich]

On the daily EUR/USD we can confirm that Wave 5 is complete. Now back to the question of anticipating the length of correction Wave A. To do so I have created a channel as suggested in ElliotWaveInternational site. I have connected lows of Wave 2 and 4 and extended. Since Wave 3 is strong, the suggestion is to connect highs of 1 and 5.

Now we have established the end of Wave 5 and I have drawn Fib retracements for Wave 5 with 38.2% at 1.4838 and 1.4770 at 50%. We have yesterday’s red candle to help us.

If I extend the lower trend line (connecting 2 and 4) it will intersect the 50% Fib at where I have drawn a blue ellipse. Corrective Wave A is expected to have a gradient in line with Wave 4. To this effect I have projected Wave A. With a vertical line it is expected that Wave A will be completed on 31 Oct. In the meantime RSI shows that downtrend will continue.

Appreciate any advice

P.S. I am still shorting and collecting pips.

EURUSD_daily_20091027.pdf (53.4 KB)

[mich]

One thing that I like about this technique is that it is making Christmas much more affordable!

Cheers

[Sweet_Pip]

To project in advance where a wave 5 could end (where we’d want to open a trade), [U]there are 3 sets of fibs[/U] that need to be drawn. For this we need the minimal setup conditions which means we need waves 1-4.

Again, I highly recommend using different colors for each Fib Set.

[U][B]Fib Set 1:[/B][/U] Draw a fib along wave 1 (0-1). Now if you are using MT4, use the fib EXPANSION tool and anchor the expansion line to 4. If you don’t, then you’ll have to physically move the [B]0-1[/B] fib over to [B]4[/B].

• As is applied on correction waves, this gives us our alternate price projections levels by using the range of one swing and forward projecting it’s range onto the start of the next swing to project in advance where it might end

Key level is 100%

[U][B]Fib Set 2:[/B][/U] Draw a fib from the beginning of the trend from point 0, to the end of wave 3. Then project that fib onto wave 4 by either anchoring the expansion line there, or physically moving [B]0-3 over to 4[/B].

Again another alternate price projection, and after we apply the 3rd Fib Set, we in effect are layering fib levels to find strong areas of suppport or resistance at a tight group of converging fib levels.

• Key levels are 38.2%, 61.8% & 100%

[U][B]Fib Set 2 (Optional):[/B][/U] Draw a fib from point 2, to the end of wave 3. Then project that fib onto wave 4 by either anchoring the expansion line there, or physically moving [B]2-3 over to 4[/B].

Again another alternate price projection. If this give a better convergence level than the previous one, use it instead.

• Again key levels are 38.2%, 61.8% & 100%

[U][B]Fib Set 3:[/B][/U] Draw a regular fib from wave 4 to wave 3 to get the extension levels.

• Key levels are 127.2%, 161.8% & 261.8%

[U][B]End of Wave Projection[/B][/U]

What we are looking for is a key fib level, from each fib set, to group tightly together.

Ok so now we analyze. In the order of importance for a grouping is the

• 38.2% & 61.8% of Fib Set 2 and/or Optional Fib Set 2,
• 100% level of Fib Set 1, and the
• 127.2% & 161.8% of Fib Set 3.

[dpaterso]

WOW ‘Sweet Pip’,

You certainly are putting in a STELLAR effort here. Nice.

Regards,

Dale.

[Sweet_Pip]

WOW ‘Sweet Pip’,

You certainly are putting in a STELLAR effort here. Nice.

Regards,

Dale.

Thanks Dale…nice of you to think so. For the most part I think I’m doing it as much for myself as for anyone else. I figure if I can rehash it well enough, then I must understand it too…lol.

So is it helping you see & understand the darn things too?

[mich]

Hi Sweet Pip,

Great contribution as usual.

My question is with regard to EUR/USD. We already know that Wave 5 is ended. Is there anyway we can find out the length and width of corrective wave A? I know this is going to be very subjective as the shape could be fairly simple to multiple internal structures. However, it would be nice to predict this as one could open a position at the end of Wave 5 (beginning of wave A) and leave the position open and close when wave A is exhausted (i.e. we have projected it).

The other point I would like to add is the role of RSI in both the trading plot and the parent plot. If both RSI agree and co-direct so to speak then it is feasible to open a daily trade (in addition to start/end of wave) to take additional advantage.

The third item is the role of chaos theory in here that we ought to deploy it at some point. The relation between chaos theory and EWT is explained briefly in the book “Technical Analysis” by Charles Krikpatrick et. al. These are called directional and non directional moves. Directional moves are those that do not correct more than 61.8%. Now we will come to it as well and if we can identify them then we can take more advantage of this method.

In an earlier post I mentioned (with reference to your points on Fib) that:

d) Wave 5 either = Wave 1, or = 1.62 x Wave 1, or = 2.62 x Wave 1.  In EUR/USD we Wave 5 = 1.61 Wave 1.

So perhaps this simple calculation should do the trick.

As I am looking at the EUR/USD it seems to me that we are at a start of a non-directional move in Wave A. That may be just as expected. We will know by COB today where we are with today’s candle.

Thanks,

Mich

EURUSD_daily_20091028.pdf (53.5 KB)

[Sweet_Pip]

Hi Sweet Pip,

Great contribution as usual.

My question is with regard to EUR/USD. We already know that Wave 5 is ended. Is there anyway we can find out the length and width of corrective wave A? I know this is going to be very subjective as the shape could be fairly simple to multiple internal structures. However, it would be nice to predict this as one could open a position at the end of Wave 5 (beginning of wave A) and leave the position open and close when wave A is exhausted (i.e. we have projected it).

The other point I would like to add is the role of RSI in both the trading plot and the parent plot. If both RSI agree and co-direct so to speak then it is feasible to open a daily trade (in addition to start/end of wave) to take additional advantage.

The third item is the role of chaos theory in here that we ought to deploy it at some point. The relation between chaos theory and EWT is explained briefly in the book “Technical Analysis” by Charles Krikpatrick et. al. These are called directional and non directional moves. Directional moves are those that do not correct more than 61.8%. Now we will come to it as well and if we can identify them then we can take more advantage of this method.

In an earlier post I mentioned (with reference to your points on Fib) that:

d) Wave 5 either = Wave 1, or = 1.62 x Wave 1, or = 2.62 x Wave 1.  In EUR/USD we Wave 5 = 1.61 Wave 1.

So perhaps this simple calculation should do the trick.

As I am looking at the EUR/USD it seems to me that we are at a start of a non-directional move in Wave A. That may be just as expected. We will know by COB today where we are with today’s candle.

Thanks,

Mich

Yes Walt did mention Chaos Theory (groan)…lol. All I know about that is Fractals, Alligators, and a couple of other oscillators.

However, to answer about where this wave A might end, since it’s not a wave point that miner addresses, aside from your suggestion, a projection of a time factor which is covered in the next part of the strategy might give a clue too, but you’d have to come up with your own conditional setup rules for it.

Just to clarify your question, are you looking to buy on every swing high/low…for example if an end of Wave A can be predicted you are asking if you could open a long trade up to B?

[mich]

…

Just to clarify your question, are you looking to buy on every swing high/low…for example if an end of Wave A can be predicted you are asking if you could open a long trade up to B?

Hi Sweet Pip,

Yes my view is that if I project Wave A to be completed by 31 Oct 2009 then we should be able to deploy chaos theory to take advantage of directional and non directional swings.

One thing we are more certain (certain being a relative term in probability) is that say we are in the middle of corrective Wave A. The general trend is downwards and we anticipate that wave A will extend until 1.4770. So as of now we have around 70 pips margin. However, that may or may not be achieved in one day. We have already opened a sell position at the start of Wave A and we will close it at the end of wave A. The alligators/sharks/monsters are all in between. If that is the case then by definition a child plot like hourly EUR/USD can be relied upon.

I can appreciate that this may not be part of this method. However, it can be considered an ‘off shoot’ so to speak.

Cheers,

Mich

P.S. I still have not received the Miner’s book from Amazon because of UK postal strike.

[mich]

I love this method.

As of now (9:45 UK time) will RSI on daily EUR/USD break through that 48.24… % or turn back!

EURUSD_daily_20091028.pdf (57.4 KB)

[Sweet_Pip]

I’m loving it too…at the moment anyways…lol.

Opened a short trade on the EU just around London open last night.

Since we think that wave A on the daily still has a lot of downside potential, I was looking for another short entry opportunity. Because of the fractal nature of waves, waves within waves, this corrective pattern can be seen as a trend on a lower time frame with it’s own corrective waves. We can see this on the H4 and even moreso on the H1.

One of the techniques I tried to explain for projecting when a wave might end is to forward project the range of one wave onto the start of the next wave of the same direction…alternate price projections (APP).

Therefore I measured from the top of wave A down to the first low and anchored the expansion line to the top of corrective high that followed (red line). Then I drews another one from the high of that correction down to the next low, and anchored the expansion line to the high of it’s corrective wave. This gives me a couple of 100% alternate price projections to target (pink lines). I also still have the regular fib levels from the prior uptrend that was used on the daily (green lines).

The question is where do I enter? What we want to do is enter at the top of a correction. Where do we know where a top of a correction will be? Well you could have drawn a trendline from the top down and enter when it touches it, OR use the technique of the next part about time/cycles …which I won’t get into now, but if you can see the cyan colored vertical lines, that’s a hint

So I entered short at 1.4810 which is the 3rd bear candle in from the right and set a stoploss of 30 pips which was just above the previous candles high of 1.4825ish.

My target was one of the 100% APP levels that converged with one of the internal retracement fib levels from the prior trend. Wave A may end at or around one of them… either the 50%, the 61.8% or the 78.6%. One of the APPs 100% line did converge with the 61.8% at the 1.4710ish area. You can see a cluster of fib lines right where the last H4 candle ended. So I set my take profit for 1.4725.

From last night till about an hour ago, it finally hit the t/p for +85

[mich]

Well spotted.

Still a lot of work to be done. Also I suggest that we turn all this disparate info into a PDF format of some sort when the whole analysis/cycle is complete.

The fact of matter is that this trading method works, pays and above all is reliable. Also a simple cost/benefit anlaysis (the investment in time and money needed to realize the value of of this method compared to the level of profit delivered to the trader) shows the viability of this technique.

Cheers

[Sweet_Pip]

Well spotted.

Still a lot of work to be done. Also I suggest that we turn all this disparate info into a PDF format of some sort when the whole analysis/cycle is complete.

Cheers

Or they could just buy the book…:p;):D…everything and more is in there…it even comes with a CD!

Speaking of PDF’s, would you consider attaching your charts as a gif or jpeg instead?

[mich]

Or they could just buy the book…:p;):D…everything and more is in there…it even comes with a CD!

Speaking of PDF’s, would you consider attaching your charts as a gif or jpeg instead?

Well I have not seen the book yet although I paid £32 for it! I believe there is always a big difference between theory and practice.

BTW I use dealbook 360. I guess you are talking about some kind of screen shot?

Thanks

[Sweet_Pip]

Well spotted.

Still a lot of work to be done.

The fact of matter is that this trading method works, pays and above all is reliable. Also a simple cost/benefit anlaysis (the investment in time and money needed to realize the value of of this method compared to the level of profit delivered to the trader) shows the viability of this technique.

Cheers

Well that’s what turns a lot of wannabee traders off…it does take a bit of work. Apparently 28 years ago, Miner used to calculate all these price strategies manually…on hand drawn charts! :eek:

So what he’s teaching us to do with todays tools is a breeze in comparison…lol.

Quoted from Miner’s book:

If you want to be successful in the business of trading, you have to take the time to gain the education and experience and make your own decisions. Sounds like every other business doesn’t it? That’s because it is. If you are willing to learn to make logical decisions based on relevant information, you have a good chance to become a successful trader.

[Sweet_Pip]

Well I have not seen the book yet although I paid £32 for it! I believe there is always a big difference between theory and practice.

BTW I use dealbook 360. I guess you are talking about some kind of screen shot?

Thanks

Yes very much so. Therefore those who work their way through the thread should be focusing on their own chart in current time…putting a pdf together of our practise trades is ancient history for them by then and Miners book and CD has loads of examples. If you want to go ahead…but I have enough to do…lol.

How do you save your charts now? When I was using FXCM’s platform I had to copy and paste the screen into windows Paint program, save and upload to babypips. I think wrtm uses dealbook too for his charts on the 30 pips a day thread…have you read through that thread yet?

[mich]

I expect the down channel on 4 hour EUR/USD chart continue today with the candles going up to 1.4765 and then retreating down.

In the meantime the pip machine is adding up.

On the daily EUR/USD chart we have established the start of corrective wave A. The difficulty being working out the swings now and I agree that the lower 4 hour timeframe will give a better picture of what is going on. May be the old channeling is the only option plus RSI indicators.

HTH,

Mich

EURUSD_4hour_20091029.pdf (41.1 KB)