Tuesday, April 13, 2010

A study of a solid elliott wave trade setup...

Not much new to report on the wave structure, so I thought I would show you a short term setup that has me interested. Counts from yesterday are still intact, with overnight range bound action. I am considering an alternate, more bearish scenario that may have us still in a fourth wave, but waiting for more evidence from the market to seriously consider.

Take a look at the 1 min chart below:

I circled the areas that have me interested, as an elliott wave analyst.
  1. 5 Waves down from a short term high
  2. MACD rolling over at the peak
  3. Wave iii of iii with peaking RSI
  4. Wave v RSI diverging
  5. Retracement into common fibonacci area
  6. Retracement has the appearance of a corrective wave

Where I have labeled wave (ii) or (b) I have an allowance for the pattern to morph into an more complex corrective pattern that will retace a bit further of the previous wave, but the message stays essentially the same.

A solid example of a potential trade setup on a very short term chart in real time. Placing a trade near the peak of wave (ii) or (b) allows risk to be limited to the peak of wave 1 where I know that I am wrong (elliott rule that wave ii cannot go beyond the starting point of wave i)... awaiting a wave (iii) or wave (c) to short term lows.

I am a big fan of this type of setup, no matter the timeframe. Hopefully, this one works out in my favor!
blog comments powered by Disqus
Ping your blog