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Catching Big Waves - a trader's journal of surfing the the markets


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Catching Big Waves - a trader's journal of surfing the the markets

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  #591 (permalink)
 josh 
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Gary, thanks a ton for the ES chart, and resources in general. I currently watch the daily structure on ES with a 500V chart, but interestingly have a trading friend who also uses a 512t. A typical equivalent seems to be around 1500-2000V. I will see if I can put a bit more objective structure on bias as you have with your MAs.

Hope your weekend is going great, and congrats on getting NT cleaned out. It does feel good to do this "spring cleaning" from time to time with computers, makes me feel like I've got a new machine

Also thanks Mike for the search tip -- I never search attachments, only posts, this will help

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  #592 (permalink)
 GaryD 
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Just to be clear, even though I am not familiar with Ichimoku, the potential for a W5 trade in gold is very good. There is no need to repost a different chart. . If I removed the Ichimoku indicators, this trade would look much more solid to me from my current understanding. But I am intrigued by the fact that the "Kumo" shows support right at the expected pivot range of a w4.

Even if the odds of this trade were less than 50%, a w5 trade is a solid setup due to the risk/reward ratio. Truthfully, I do not know the "odds" of a w5. But they are still a favorite. I have not figured out how to computer backtest them. I just know that when they do work, they are worth the effort.

Part of what makes a w5 so appealing is it is atypically measurable. Unlike a lot of waves, a w5 has a lot of the story already layed out before you. W2 and W4 should share similar lengths, as should W1 and W5. You have a W4 to measure off of to the upside as well. I know a trader who wrote a trading plan to only take W5 trades.

A trader could take a low timeframe entry of a reversal to the upside in a zone of expected support, set the stop below the presumed low pivot, and have an expectation of a minumum of the length of W1. You could get stopped out and try again and, if it completed the 5wm, still come out ahead.

As always, STAY SAFE. No trade is worth any more than any other trade. A W5 is not a "bet the farm" trade, nor is any other setup. Regardless of indicator, sentiment, value, chart pattern or star alignment. The future remains to be seen.

But, a w5 is a solid trade. If gold turns here it could present a favorable opportunity.

The biggest downside to me is the expected whippy motion due to "holiday" volume, but that could actually work in favor of this trade. Since this wave structure is on a daily chart, the hold time is expected to be over 1 week to get the complete benefit of the setup.

Good Trading!

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 GaryD 
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Due to my recent reload of NT, I do not have the tools to provide a thorough analysis of this trade tonight. I am traveling again this week, so the timing may not work out. But this will be an interesting trade to chart and I plan to revisit this when I get the time.


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 GaryD 
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Until the potential W4 bottoms, the upside target is subject to change.

The green zone is the preferred W5 completion target based on where gold closed on Friday, but without a confirmed reversal that is not as clear as the zone just below it, which, among other factors, includes an exhaustion fib off the start of this possible 5WM. The highest zone, 1960-1980, has a lot of confluence as well, but requires breaking through a lot of resistance first.

I may take an "entry-ready" trigger on a trailing 3 bar high somewhere between a 15 minute and 60 minute timeframe. I have not traded gold for a long time, so prefer to watch it for a day or two before I decide. Gold always felt somewhat more volatile to me than crude, which I would assume is due to the reduced volume, and so I have moved away from it for the most part. But if gold can hold support, the risk/reward on this trade is very favorable.

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 David_R 
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Gary,

When you refer to the waves as in W4, W5 etc, are you referring to them in terms of Elliott Waves, or just swings? I think in terms of Elliott wave 4 should not overlap wave 1, so that would limit the downside that W4 can retrace. If it does overlap, it may have other implications from an EW perspective, one being that W5 may not play out. I'm not an EW person and know enough to be dangerous, but I think the overlap rules valid.

D

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  #596 (permalink)
 GaryD 
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David_R View Post
Gary,

When you refer to the waves as in W4, W5 etc, are you referring to them in terms of Elliott Waves, or just swings? I think in terms of Elliott wave 4 should not overlap wave 1, so that would limit the downside that W4 can retrace. If it does overlap, it may have other implications from an EW perspective, one being that W5 may not play out. I'm not an EW person and know enough to be dangerous, but I think the overlap rules valid.

D

Correct. And so far, W4 has not traded into W1. The top of W1 is what we would expect to be the strong point of support.

But, even if it does, the market does not know the rules. Elliot wave is not the only theory, and a slight penetration does not necessarily invalidate a pattern.


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 GaryD 
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This may be a better view. The 618 of the w 3 would be what I expect the outside range of support should be. Even though that may mean a slight move into W1. But, If this is a w4, it could be subdivided into an ABC (pink lines) which projects an external 162 at 1697.2 and a 162 APP of WA at 1689.

My thing is more confluence. Any of these elements could be support. The green trendline moving into the range of support has my attention as much as anything.

If I was to enter this trade on a 3BH, the support does not matter as much, as long as it is not completely penetrated, because I would not be trying to catch the turning point at the bottom, but as it rose off of it.


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 GaryD 
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I realize the support zone was slightly broken, but not by much, and now gold just peeked out back above the zone.


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 GaryD 
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On a 60 minute chart the 3BH is broken slightly


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 David_R 
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Gary,

The lines drawn in pink looks like it could be unfolding in 5 waves and the move up now could be a 4th with a 5th to come. Also, the wave 3 on your chart appears to be a two wave structure, not 5. Like I said before, I know enough to be dangerous, but just want to throw out another perspective.

D

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