I know quite well about divergence showing up in wave 5. I am talking about subtle divergence showing up BEFORE wave 5 -- actually at the very end of the 3rd of 3rd.
There is NO Elliott rule on this, I am sure, but I was asking if you personally had observed any such occurrence?
I have, actually -- in spades, and would very much like you to give it some thought over the next several weeks, if you haven't already.
Here's the gist of it: (refer to uptrend as an example)
The 3rd of wave 3 produces maximum impetus which is clearly visible on Macd histogram, Macd and RSI(14). Then, when the actual wave 3 completes, generally there is a clear negative divergence already showing on these 3 indicators. So, actually this is the start of the divergence -- it actually starts right after 3rd of 3.
Then wave 4 generates a lower low usually and shows larger displacements on the histogram, Macd and even RSI generally.
From this huge drop in momentum, it is easy to see why wave 5 delivers the final divergence. There is just too much ground lost for it to make up, especially considering the fact that it is a terminating wave.
My point is that we've got to look earlier than wave 5 for the point when such divergence is actually being born!
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