EurUsd: 4-hr move from Feb 27th

A samurai weapon -- apply to current EurUsd 4-hr chart rally from Feb 27th.

In Hollyweird it would be called Thunderlips.

aka "Trendline by angle"

Observe that the rally thus far scores 51 degrees angle of ascent, aka angle of attack. I believe virility of this calibre must be respected by all women. The current correction on the 4-hr is therefore a regrouping and recharging of the seminal vescicle.

Can it be a dud? Yeah, in which case it would be tantamount to using Viagra, which in my book, is cheating and earns my scorn. In this event, I be wrong and bow out gracefully.

If wrong, then let it be known that I came so that the Scriptures may be fulfilled!

Testing to see if I can post a picture

Here's the pic of the CAD from earlier.

The compose and edit functions are still kinda buggy.

Euro Update

Idejan and Joseph,

Here’s a couple of screen shots, that show my current thoughts. From last week price has found resistance on the black fork, Thinking this is the 5th that has been discussed earlier, ( I know you two are thinking that this current drop is a corrective wave, and I may agree to a point however I believe that the correction is much larger than shown 5 down, 3 up and 5 down perhaps??)


On the hourly, Don’t faint Joseph, as I mentioned earlier, have been trying to long on a retrace of wave 1. If my thoughts are correct, price will make the red box and reverse south setting up a 3rd wave down, and should be a good one. Price is making a small H&S on the hourly, and if price fails to meet the top of the upward sloping expanding channel ( if will have to storm north to do so) would show weakness in the euro, imo. Might add my north trade has not netted many pipola’s basically trying to catch what I can of the retest to enter south again. Would like to see at least a 50% pull back and will start to scale in longs again. Upper tine of the black pitch fork will be my failure point.

Joseph your C correction may be valid still, as price is still within the two major forks, but so far price has respected the south. One of the two will have to give soon, and price’s direction will be known.

CAD??

Joseph,

Running like the ole' chicken with it's head chopped off today, will post some charts this evening, Idejan was wondering my thoughts on a possible Eur top, but I couldn't help but take a break and post this....

Time for a retrace, but do think we are putting in a bottom, time will tell.

for some reason I can't add a pic, will try to edit later

Finally those EW points

I’m starting with the Note I posted to Joseph on his questions about longer term USDJPY view simply because in my opinion it is the most important thing you should focus when analyzing Charts.

Corrections, can start with both Impulsive action (A and C of a corrections can be IM waves) and Corrective action. But Reversals can only start with Impulsive action, and wave One could be either IM or LD (Leading Diagonal) in both cases the internal structure is 5-3-5-3-5 with the difference - possible overlapping if LD. LDs are rare.

A correction in the above note is …Reversals and Continuations can only start with IM...

When you analyze your charts, what you are interested in is finding OPPORTUNITIES.
First thing to learn in EW even before how to label a chart, should be that the only waves you would like to trade are MOTIVE waves or better said IMPULSIVE ones, and depending on the scale you would either trade the whole moves or only some of the actionary subwaves 1, 3 and 5 of the IM.
This is simply because they are more predictable and provide larger directional moves, thus presenting a better Risk to Reward opportunities (lower Risk to greater Reward potential).
Correctional moves are difficult to both predict and even more difficult to trade.
An exception could apply in cases where A and/or C are IM waves.
Since we all know the basics of EW no point on explaining them, but out of that basics comes a simple conclusion.
Motive waves move in a five wave structures and corrective in a three.
So either way there is a third wave always.
And since you need at least two points to determine direction, that is why the best waves to trade are 3rd waves of an IM and Cs, especially when C is IM itself. This also because ZigZags correctional patterns are prety much same with IM since thay have internal structure of 5-3-5 but the diference is that they are 3 wave structures, so the next 3-5 will not happen and that can full you.

What I will present here is something you all know, and is very very simple, so simple I'm not sure I sould be writing about it. But this in my opinion is the first and most you should know of EW when analysing Markets looking for opportunities.

When we are looking on a chart we are actually looking at/for either:

• Reversal of the trend
• Continuation of the trend
• Or Correction of the trend

(since I was chatting in a room, this took more time to write so I’ll make it short and then explain if there are questions)

• If we are looking for a Reversal, we will look for a finished IM wave and IM wave started after it but in the other direction (one of a smaller degree). Problem here is because the next returned IM in the other direction could be either wave 1 of the reversal or just a wave A of the correction. That is why it is better to wait for a confirmation.
  Answer on this dilemma lie just below the previous IM end (top or bottom) and after the next IM wave (in opposite direction) is finished the confirmation is above that wave high.

• If we are in a Continuation, than we want to see a finished IM wave followed by a correction. This is excellent indication for a continuation above previous top (or below bottom)(exemptions are failed or truncated fifths).

• So as mentioned in previous case, Corrections are only good indication of a continuation of a previous trend. But you can also trade the 3rd waves of the corrections labeled as C waves, as they provide same or similar opportunities as 3rd waves of an IM because they can develop as IM waves too. C waves of the Flats and ZZ must develop as IM waves.

This is the essence, no matter how you label the charts, this is what will give you the most important answers and will help you find the best opportunities on that charts.

I’m preparing a video for USDJPY questions. Link coming shortly after I manage to pack it in reasonable size.

Below is the Joseph's Long Term USDJPY and 3 points of consideration.

On the second (ok if considered C but should be followed by IM... should add ...or followed by D)

Addition to the 4/1 overlapping post should be that overlapping in Impulsive waves is also possible in two special cases: Leading Diagonals and Ending Diagonals, which are type of Triangle formations but with steeper advancing slope. LD could develop in wave 1, and ED in wave 5. Difference between this two are that, while ED have internal structure of 3-3-3-3-3 same as corrective waves, LD have 5-3-5-3-5 IM structure with typical overlapping.

Last calls from 28 of Feb, came out nicely, but unfortunately I was not able to publish a follow up on them.

ID

USDCAD: Look Ma: you told me there'd be days like this!

:) :) this is getting more and more hilarious. Witchcraft! voodoo! What will the fundamentalists say?

But wait, here's a thought -- others feel free to offer some arguments for and against, OK?

so far, textbook bounce off daily macd/RSi trendline support -- in this case the Macd fired first -- but also the FE 161.8%. Currently at FE 100% resistance after also hitting 38.2 fib.

My analysis tells me this is a wave iv and that we've got to go back down for wave v to the 161.8% level @ 1.1300 or thereabouts again.

That will be good temp bottom. This is MHO.

But some of you may feel that the rally is going to just continue and not return to the 1300 area.

Well?

Good news for Forex newbies!

NFA and CME both have started offering free online courses for Spot and currency futures respectively.

Most liquor stores now carry shark repellent. Get some!

You don't need to spend thousands of dollars to learn the Forex. My experience? The best courses are free. Don't burn your capital on junk. Pure Forex books? .... bah!

There are also a couple free e-books that I read when I got started last year. That was plenty enough for me.

Another place I'd recommend is the free Q&A sessions at FXCM -- these are recorded sessions and it will take several days to finish reading them; but it is generally good stuff, with a broad overview of the different pairs and their correlations, if any.

But for your continuing education and actually the creme de la creme, you really ought to download all the issues of CurrencyTrader magazine -- first issue was in October 2004. This is a monthly mag and it will supercharge your forex ammo.

These guys are good -- they even answered my questions meticulously and quoted me twice, thus far, hehehehe. Best news? Its free, baby.

Other advice: low position size, trade less, less, less. Keep it simple and don't go live until you're ready NOT to lose money! Its never OK to be willing to lose money to learn!

Disregard that system selling (3,000 or 3,500 pounds Sterling) moderator shark at Moneytec who has stated very often -- "you must learn to lose money professionally first!"

Goodluck! :)

Wave 4/1 overlap ..... (contd.)

Bear and ID -- good stuff, much obliged.

There you have it; I did NOT know about the overlap being acceptable on smaller timeframes; and I can tell you that I am relieved to read your answers; especially about application in leveraged markets.

So many times I've just flat out rejected a count because I saw an encroachment and then ended up scratching my head for days as I concluded that there just could not be any other sensible count.

Would appreciate ID throwing in a chart example of an actual encroachment on a smaller timeframe, esp. if such occurred on the 4-hr.

Answers to some of the questions

I apologize to all not participating actively this few days.
I'll start with few of the questions and answer others in a while.
Mean while I'm in the ChatRoom so I invite for a chitchat.

• Remember my trading system? ..... Enter/exit when the head says No, the heart whispers compassionately, Yes -- and the soul demands it!

There are experiments that show men learns (knows) things long before they are aware they know them. Long before conscious mind digest content. But this will take us to unknown territory.
My thought on this is that when we are born we know everything, but then the system makes his best to put us in as smaller box possible, our parents, school, work, are bombarding us with Constrains and we end up knowing nothing.

• So the obvious question is, "can it ever enter wave 1's territory?" By this I mean, "can any part of wave 4, be it the beginning, middle portion or the end, ever touch or enter wave 1's territory?"
  

It is not uncommon that wave 4 enters into wave 1 territory in a Leveraged markets and especially in highly leveraged ones. But when so, it is usually on a smaller time frames and for not more then 15% of wave 2 length and for not more than day or two.

• I knowed we wuz in trubbel when waveid's traffic meter's wave C crossed the 78.6% retracement mark, a plot of land was p-oychased right adjascent to Moneytec's afterlife jumbalaya & 100s of winners popped open the lids of their coffins and in one unified voice screamed, "what the heck is goin on?"
  
  

I'll do my best to find more time, but I'm not lacking willingness. I sincerely hope to be able to give more here, and I don't have any problem with how visited this place is. I simply enjoy this small party. Especialy since it gets just about the same regular visits as on MTec.
Wave 2 can last up to nine times the time taken for wave 1 to complete :)
Wave 1 took 1 week.

ID

PS. I’m writing a longer text to explain my points on EW, and it will be published very soon today. I believe that will answer all other questions. Later we can discuss it on a chart.

A can of worms

Joseph,

Your bringing up a question that’s going to start civil unrest. Here’s my take. And it’s just my view, so take it with a grain of salt. I believe that while the (5-3) or 8 wave pattern does define price, the guidelines or rules for wave configuration in highly leveraged markets tend to get bent. I think for the most part the rules remain intact, but when price in on a stampede it can trample down the corral that would normally contain it, ( or overshoot areas that would generally provide sup/res as the high or lows of prior waves.

Also I do not discount the fact of some minor market manipulation when price is trading near levels, there’s a lot of blackbox, system trading, I think there are times when price is near certain levels that price will be pushed to trip the levels of some systems.

I thought that Frost and Prechter mentioned leveraged markets in the book but I am unable to find it this morning, need more coffee…….

In a nut shell, yes I think they can over lap, albeit slightly I can't see wave 4 having lunch with the end of 2 , but more on the smaller time frames. I don’t think this is the norm (need some sort of structure or the whole things useless) just I keep it in the back of the noggin that’s it’s a possibility.