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11 Nov 2011 22:25:44 -0000 Sender: Divergence@yahoogroups.com MIME-Version: 1.0 Mailing-List: list Divergence@yahoogroups.com; contact Divergence-owner@yahoogroups.com Delivered-To: mailing list Divergence@yahoogroups.com List-Id: Precedence: bulk List-Unsubscribe: Date: Fri, 11 Nov 2011 14:27:51 -0500 Subject: [Divergence] NASDAQ, 11/11/11, WEEKLY AND 4 HOUR EW POSITION [4 Attachments] Reply-To: Divergence@yahoogroups.com X-Yahoo-Newman-Property: groups-email-ff-m Content-Type: multipart/alternative; boundary="----=_NextPart_001_0002_01CCA07E.1A0AF170" ------=_NextPart_001_0002_01CCA07E.1A0AF170 Content-Type: text/plain; charset="us-ascii" Content-Transfer-Encoding: 7bit Weekly; Solid colored vertical lines mark impulse waves (1, 3 and 5), red dashed lines mark countertrend corrective waves (2, 4 and (B)). 7 of the 8 waves in the WEEKLY period have been conclusively traced by price. Each wave high or low is accurately identified by fractals, a significant objective fact. The purpose of an analysis is to objectively identify price location in the EW cycle which controls price action. In this instance price is now tracing corrective wave (C) in the WEEKLY period. Wave (C) will be an impulse 5 wave cycle lower. Why? There are eight potential corrective patterns (see the "cheat sheet" attached) which may occur subsequent to wave 5 high. The only pattern which traces a 5 wave impulse pattern for wave (A) is a zigzag pattern which necessarily means that the final wave (C) will also be an impulse 5 wave pattern lower. It is possible that price subsequently may trace a double zigzag, a corrective pattern not accurately depicted on the "cheat sheet". Price is always tracing the next longer EW cycle. Wave 5 (A) in the weekly is the low of wave 1 in the monthly. Wave (B) in the weekly is also wave 2 in the monthly. It follows that Wave (C) in the weekly will be a 5 wave cycle lower to wave 3 in the monthly period. Thereafter price will trace corrective wave 4 then impulse wave 5 in the monthly period. Typically RSI will trace a complex W below its 30 line followed by RSI tracing above its 50 line. RSI will then trace a higher low value compared to RSI value at wave 3 low, a CPD between waves 3 and 5. These price and RSI/MACD tracings are an inverse head and shoulder pattern. 4 Hour; All vertical lines observed in the weekly are present in this period. RSI, MACD, fractals and divergence provide appropriate guidance for trade events in shorter periods. Wave 3 low always reports lowest RSI and MACD values and a CPD between waves 3 and 5 indicator values. Timing of corrective waves are always more difficult than impulse patterns. Comments; 1 and 4 hour periods will offer multiple opportunities to join corrective wave (C) in the weekly period. Wave (C) will be an impulse 5 wave event. These are lower risk trades since they are in the direction of the weekly and monthly down trend. ETFs of differing risks are available, long or short. The weekly chart documents the presence of price fractals at all wave high or low events and they are therefore essential. EW analysis of price location requires accurate identification of the last traced weekly fractal. In other words, which EW was last trace by the most recent weekly fractal. In this chart example that wave was (B) in the weekly, wave 2 in the monthly. I also attach an article from EW International, "How the Wave Principle Can Improve Your Trading". Loren ------=_NextPart_001_0002_01CCA07E.1A0AF170 Content-Type: text/html; charset=US-ASCII Content-Transfer-Encoding: 7bit  
[Attachment(s) from Loren Morlan included below]

Weekly;

Solid colored vertical lines mark impulse waves (1, 3 and 5), red dashed lines mark countertrend corrective waves (2, 4 and (B)).  7 of the 8 waves in the WEEKLY period have been conclusively traced by price.  Each wave high or low is accurately identified by fractals, a significant objective fact.  The purpose of an analysis is to objectively identify price location in the EW cycle which controls price action.  In this instance price is now tracing corrective wave (C) in the WEEKLY period.  Wave (C) will be an impulse 5 wave cycle lower.  Why?

 

There are eight potential corrective patterns (see the “cheat sheet” attached) which may occur subsequent to wave 5 high.  The only pattern which traces a 5 wave impulse pattern for wave (A) is a zigzag pattern which necessarily means that the final wave (C) will also be an impulse 5 wave pattern lower.  It is possible that price subsequently may trace a double zigzag,  a corrective pattern not accurately depicted on the “cheat sheet”. 

 

Price is always tracing the next longer EW cycle.  Wave 5 (A) in the weekly is the low of wave 1 in the monthly.  Wave (B) in the weekly is also wave 2 in the monthly.  It follows that Wave (C) in the weekly will be a 5 wave cycle lower to wave 3 in the monthly period.  Thereafter price will trace corrective wave 4 then impulse wave 5 in the monthly period.  Typically RSI will trace a complex W below its 30 line followed by RSI tracing above its 50 line.  RSI will then trace a higher low value compared to RSI value at wave 3 low, a CPD between waves 3 and 5.  These price and RSI/MACD tracings are an inverse head and shoulder pattern.

 

4 Hour;

All vertical lines observed in the weekly are present in this period.  RSI, MACD, fractals and divergence provide appropriate guidance for trade events in shorter periods.   Wave 3 low always reports lowest RSI and MACD values and a CPD between waves 3 and 5 indicator values.  Timing of corrective waves are always more difficult than impulse patterns.

 

Comments;

1 and 4 hour periods will offer multiple opportunities to join corrective wave (C) in the weekly period.  Wave (C) will be an impulse 5 wave event.   These are  lower risk trades since they are in the direction of the weekly and monthly down trend.  ETFs of differing risks are available, long or short.

 

The weekly chart documents the presence of price fractals at all wave high or low events and they are therefore essential.  EW analysis of price location requires accurate identification of the last traced weekly fractal.   In other words, which EW was last trace by the most recent weekly fractal.   In this chart example that wave was (B) in the weekly, wave 2 in the monthly.

 

I also attach an article from EW International, “How the Wave Principle Can Improve Your Trading”.

 

Loren

 

 

 

 

 

 

 

 

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Attachment(s) from Loren Morlan

2 of 2 Photo(s)

2 of 2 File(s)

ewpclubtcc2.pdf
EW Cheat Sheet 3.pdf
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