As you can see here we have completed 5 cycles in this trade channel. While it seems we are still within the channel it is my belief we started a new trend here. Its difficult sometimes to anticipate a trend change and I think it occurred here with the final move in the pattern completed on Monday this week. Yes, the only top I did not short, that by itself is a bearish sign, because me being the most committed bear has held back - as good as a sign as capitulation.
Now time wise lets take a look at it again. We have had a great rally off the major low that lasted 10 days. Time in channel has been around 15 days. When looking at FIB time lines we have just reached 161%, a point that has a high probability of changing trends.
So from a trade perspective what are we looking for? First of course the support we will get off the 838 range if we reach it today. The next move up would be a fake up move, marking a lower high compared to Monday. I would expect it to top out around the 854-856 range either today or tomorrow. If that is to occur, the probability of a new channel are very high with the 856 marking the new upper range for that channel.
The new channel should have a downward trend with the same angles as the most recent up trend (our existing channel). I expect this channel to be 50% or 61% in length compared to the previous trend which brings us to a potential of 9-11 days. After this we either make another move to the upside or resume the primary trend. My bet would be the later one.
I will be watching this move very closely and keep everyone updated.
also worth mentioning that every FIB level here either marked a top or bottom.
ReplyDeleteBrilliant analysis! thank you
ReplyDeletevery close....835.58...still on course or do you think it was a break and ptential to see 826-828?
ReplyDeleteas per twitter I am long at the moment. Watching it closely to make sure its not just a GAP fill. As per this post I am expecting a bit of a run up to make a lower top, do not think it will occur today but possible.
ReplyDeleteappreciated.
ReplyDeletereason I did not consider it a break is due to pre-market having pushed it over the support range. We need to make a break above 838 here in the next 15 minutes, otherwise we may have seen the top of the day and will trend lower.
ReplyDeleteon the button again! well done. i think you mentioned it topping out around 854-856 once we got to this stage.
ReplyDeleteits possible. Need to wait and see. Will add long once we fill gap and make it 2 pts above previous close.
ReplyDeletehoping for more upside as per your twitter update...im waiting for it to retrace back down for a better entry for a short long...any thoughts on where it may retrace back to??...
ReplyDelete840-841 but depends on how we continue here. Had another long as well (futures) that I just closed out. A bit too fast too soon. But I could be wrong and we just keep on going which will then require to switch positions to short.
ReplyDeletere entry for short long?
ReplyDeleteseem to be forming a small decending wedge
ReplyDeleteChaugner. What's up, buddy? I see you are stepping up the posts! Good stuff.
ReplyDeleteI've never used fibs on a horizontal perspective -- quite interesting. When you say "we have completed 5 cycles of this channel," are you referring to EW or is 5 cycles just the norm for the completion of a given channel?
heya, yeah been a lot more active and supporting some of my statements with more facts to make it easier to understand.
ReplyDeleteI use 3 cycles for daily moves (like the long this morning, closed out on the top off every cycle), same as yesterday afternoon, 3 cycle moves.
For longer term moves, while I use Elliot Wave, I only apply it to longer term patterns (1+ year). When trading in a channel I have seen it many times that a pattern changes after 5 moves are completed, regardless if they are Elliot wave or not (as elliot wave has specific requirements for each cycle in terms of size and retracements).
And regarding FIBs on horizontal, been using this a lot in the past 4-5 months and been very successful at it. As you remember some of my change of trend calls are based off this (in addition to other patterns and variables). Its a great addition to a trade plan or pattern but generally not as strong if used on its own without any supporting pattern.
Adam, just went long but do not expect it to go very high today. We retraced beyond the 62% which is a bit bearish and as a result, I do not expect a new high to be made today.
ReplyDeleteThank you for the update.
ReplyDeletegetting close to our top of the day...thinking of going short
ReplyDeleteyeah went short earlier and got stopped. Thinking about trying one more time.
ReplyDeletenot seeing the volume here for a strong down turn. Market has 5 more minutes, if we will not drop in the next 5 I will exit current short (or at least minimize with tighter stop).
ReplyDeletequite frustrating really...no real direction...almost as if the market is waiting for something...possibly the tech earnings?...i dont know.
ReplyDeletequite frustrating indeed. No volume at all, and the one spike on volume stopped me out just to drop after wards. All done for the day trade wise. Was up nicely earlier but started getting trigger happy and got back to break even. That's what I get for over trading.
ReplyDeleteNever mind, our day will come soon, i'm sure.
ReplyDeleteI'm waiting to see if Martin Armstrong's theory is really gonna play out to the day, haha. Depending on how you crunch the decimal points, something major would have to occur on thursday, friday or monday. I'll shit my pants if it does. Amazingly all the stars seem to be aligning for a major move of some sort.
ReplyDeletecrazy markets. And yeah, date is set for this weekend. Wonder what is going to happen? lol, it would be very ironic if we make a top here in the next few days.
ReplyDeleteany idea where we are headed?
ReplyDeleteNo idea where we are headed. And as Chaugner's old quote used to say: "If you don't know where you are going, don't speed up." Or something to that effect.
ReplyDeleteIf I had to throw my hat into the ring (and trust me, this hat has many ashen burn marks on it), I'd say we will top out this week or close enough if we continue higher from here. Possibly a blow off top, similar to what happened in 2002 when we were bouncing off the bottom (and no I don't think we've reached the bottom). Everyone seems to be looking for that 870-875 range. Therefore if things go as they have been, I wouldn't be surprised to see it goes a tad higher, just to scare the last shorts, out of their shorts. If we approach that 856 range again it probably would be okay to start scaling into your short positions depending on your time frame. I want to build a large position I can ideally ride for a swing trade down to the low 800's at bare minimum. To do this I probably won't use anything more exotic than SDS, since the decay isn't that bad. FAZ is also starting to look tasty again if the finnies (RIFIN) establishes a double top here. That thing is an animal though and I've been it's meal one too many times. Use small, manageable positions -- don't end up in an after school special like myself.
I agree with you. SDS is more stable. SRS has had bigger moves, although of lower value in the couple of days. SRS 31-36, SDS 67-70. In any case, some poeple play both FAZ and FAS as spread. Dou know how does that work. If one is moving better than other, you have to be in right direction or is it safe in both directions--long and short. The claim is that you have guranteed return --alomost gaureented.
ReplyDelete