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01 Jan 2012 00:59:21 -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: Sat, 31 Dec 2011 17:28:58 -0500 Subject: [Divergence] Video link re corrective waves/ NASDAQ/ 12/31/11, MONTHLY AND WEEKLY [2 Attachments] Reply-To: Divergence@yahoogroups.com X-Yahoo-Newman-Property: groups-email-ff-m Content-Type: multipart/alternative; boundary="----=_NextPart_001_0044_01CCC7E1.B00D4350" ------=_NextPart_001_0044_01CCC7E1.B00D4350 Content-Type: text/plain; charset="us-ascii" Content-Transfer-Encoding: 7bit Link below describes corrective waves. The issue for most traders is how exactly may price be objectively and accurately located within the EW structure. The link below does not address that specific issue. However two NASDAQ charts are attached which addresses the issue of objectivity and therefore greater accuracy of trade events. It may be necessary to copy and paste the link to your browser. http://www.poweryourinvestment.com/featured/elliot-wave-principles-correctiv e-waves/ Monthly; Price has most recently traced the high of longer term wave 1 in the monthly period. ZUP76 traces in this period a bearish AB=CD price pattern (not included on this chart) at wave 1 high. This and other similar bearish price patterns are objectively consistent with the high of motive wave 1. Price patterns do not always occur at wave highs or lows. However they often are traced at the end of EWs and are creditable. RSI is one of the most important indicators which objectively identifies specific wave highs or lows. In this and all chart periods RSI traces its highest RSI value incident to motive wave 3 (up or down). Wave 3 is never the shortest motive wave and is most often the longest. Wave 3 reflects in the case of an uptrend the most aggressive trading behavior of bulls and the reason RSI reports its highest value. RSI traces a complex M above its 70 line which suggests price will later easily exceed price high of wave 3. In this chart example price fulfilled that prediction with a higher price at wave 5. RSI or MACD will always trace specific different type divergences between wave 3 and 5 and 2 and 4. There will always be a CND between motive waves 3 and 5 as depicted. There will always be a RPD between corrective waves 2 and 4. These are objective divergence observations will always occur in an EW cycle. Fractals are also an important objective indicator with respect to motive or corrective wave highs and lows. Each of the waves identified in this example traced objective fractals. This is not an accident or good luck. For those interested in the study of fractals see Dr. Williams book, "Trading Chaos" on this subject. Fractals are also present in all time frames considered. Price has conclusively traced the first 5 waves of an 8 wave EW cycle. The above mentioned objective findings establish this conclusion. This means that a long term trend change has in fact occurred. The prior trend from the chart high to chart low X was a down or corrective cycle. Price has most recently completed motive wave 1 of a new uptrend and thus a trend change is now documented. The EW price structure always traces a corrective cycle subsequent to wave 1 high. Price is now tracing wave A of a three wave corrective cycle lower retracing a portion of prior motive wave 1. This corrective cycle will trace waves A, B and C lower to corrective wave 2 after which price will trace motive wave 3 higher, corrective 4 then motive wave 5 higher. Incident to wave C/2 low Fibonacci retracement and time zone studies are used on this chart. Corrective wave 2 often retraces 78.6 of the previous uptrend. Time zone vertical lines begins at chart low to wave 3 high and projects a low for wave 2 on 10/26/12, just in time for the election. These studies are not objective unless and until they fulfill their suggestions and are considered in reference to future possible price action. Price is now tracing corrective waves which raises the issue of the specific nature of that corrective cycle. There are eight possible corrective cycles price may trace incident to wave 2 low. It is important to observe that the most frequently traced pattern for wave 2 is either the sharp zigzag or flat. The fundamental reason for this is that most traders erroneously assume that wave 2 decline is a continuation of the previous longer term down cycle. It is a bear trap set by bulls. Price may trace a double bottom with wave 1 depending on how aggressive bears are in wave 2. How may an analyst objectively determine the specific nature of corrective wave 2? The answer to this important question rests in an understanding of the EW structure itself. In this respect price always traces in shorter periods EW price patterns which will later appear in longer periods. This is a most important feature of the EW structure which requires price to first trace in shorter periods then later the same in longer periods. Study of the monthly chart price action does not answer that issue. Examination of shorter periods will answer that issue. Weekly; Solid vertical lines identify motive waves 1, 3 and 5 down to longer term Wave 1 low. Corrective waves 2 and 4 are red dashed lines. Divergences and fractals are present at their required locations in a down cycle. RSI lowest value identifies wave 3, later higher RSI value at wave 5 and a CPD. Corrective wave 2 has three waves higher (observed in the daily period) not observed in the weekly. Completion of wave 2 is a full impulse 8 waves lower. The only corrective pattern which traces this pattern is the zigzag which most often is observed as a wave 2. This pattern will later be traced in the monthly period. In the weekly this zigzag will be plainly traced to its C/wave 2 low probably around 78.6. Price is presently searching for corrective wave A low. Wave A will be an impulse wave (5 waves down, 3 up). Wave B will be three corrective up and wave C/2 will be another impulse wave. This is the definition of a zigzag pattern. It is being traced at wave 2 its expected location. Price has most recently traced corrective wave 2 identified by the most recent fractal. RSI traces below its 50 line, both MACDs at or near their zero lines suggest price is now searching for shorter term motive wave 3. Comments; It is required that the longest period available be studied and permanently marked with vertical lines identifying EWs. Currency, commodity or equity. Shorter periods permit more accurate identification of EW highs and lows using the objective features mentioned above. These EW lines appear in shorter periods and assist in entry with lower DD. Many traders do not understand EW and therefore have no idea where price is located in the EW cycle. EW trading only becomes practical when the analyst is able to apply uniform objective rules and features to price behavior as its traces through this cycle. In this regard, RSI, divergences, fractals, Fibonacci studies, price patterns and momentum decay or recovery are all relevant to this analysis. It is important to recognize that corrective waves A and C may be impulse waves in the case of a zigzag correction. Some hold the mistaken belief that waves A and C must always be 3 wave events. That is not so. ETFs long or short may be used to trade the NASDAQ. This equity market is not manipulated like many discreet equities, commodities and currencies. I invite others to post their charts and analysis re these issues. Best wishes for a happy and successful new year. Loren ------=_NextPart_001_0044_01CCC7E1.B00D4350 Content-Type: text/html; charset=US-ASCII Content-Transfer-Encoding: 7bit  
[Attachment(s) from Loren Morlan included below]

Link below describes corrective waves.   The issue for most traders is how exactly may price be objectively and accurately located within the EW structure.   The link below does not address that specific issue.  However two NASDAQ charts are attached which addresses the issue of objectivity and therefore greater accuracy of trade events.  It may be necessary to copy and paste the link to your browser.

 

http://www.poweryourinvestment.com/featured/elliot-wave-principles-corrective-waves/

 

Monthly;

Price has most recently traced the high of longer term wave 1 in the monthly period.   ZUP76 traces in this period a bearish AB=CD price pattern (not included on this chart) at wave 1 high.  This and other similar bearish price patterns are objectively consistent with the high of motive wave 1.  Price patterns do not always occur at wave highs or lows.  However they often are traced at the end of EWs and are creditable. 

 

RSI is one of the most important indicators which objectively identifies specific wave highs or lows.  In this and all chart periods RSI traces its highest RSI value incident to motive wave 3 (up or down).  Wave 3 is never the shortest motive wave and is most often the longest.  Wave 3 reflects in the case of an uptrend the most aggressive trading behavior of bulls and the reason RSI reports its highest value.  RSI traces a complex M above its 70 line which suggests price will later easily exceed price high of wave 3.   In this chart example price fulfilled that prediction with a higher price at wave 5.

 

RSI or MACD will always trace specific different type divergences between wave 3 and 5 and 2 and 4.   There will always be a CND between motive waves 3 and 5 as depicted.  There will always be a RPD between corrective waves 2 and 4.   These are objective divergence observations will always occur in an EW cycle. 

 

Fractals are  also an important objective indicator with respect to motive or corrective wave highs and lows.  Each of the waves identified in this example traced objective fractals.  This is not an accident or good luck.  For those interested in the study of fractals see Dr. Williams book, “Trading Chaos” on this subject.   Fractals are also present in all time frames considered. 

 

Price has conclusively traced the first 5 waves of an 8 wave EW cycle.  The above mentioned objective findings establish this conclusion.   This means that a long term trend change has in fact occurred.  The prior trend from the chart high to chart low X was a down or corrective cycle.  Price has most recently completed motive wave 1 of a new uptrend and thus a trend change is now documented.  The EW price structure always traces a corrective cycle subsequent to wave 1 high.   Price is now tracing wave A of a three wave corrective cycle lower retracing a portion of prior motive wave 1.   This corrective cycle will trace waves A, B and C lower to corrective wave 2 after which price will trace motive wave 3 higher, corrective 4 then motive wave 5 higher.  

 

Incident to wave C/2 low Fibonacci retracement and time zone studies are used on this chart.   Corrective wave 2 often retraces 78.6 of the previous uptrend.  Time zone vertical lines begins at chart low to wave 3 high and projects a low for wave 2 on 10/26/12, just in time for the election.  These studies are not objective unless and until they fulfill their suggestions and are considered in reference to future possible price action.

 

Price is now tracing corrective waves which raises the issue of the specific nature of that corrective cycle.  There are eight possible corrective cycles price may trace incident to wave 2 low.  It is important to observe that the most frequently traced pattern for wave 2 is either the sharp zigzag or flat.   The fundamental reason for this is that most traders erroneously assume that wave 2 decline is a continuation of the previous longer term down cycle.  It is a bear trap set by bulls.  Price may trace a double bottom with wave 1 depending on how aggressive bears are in wave 2. 

 

How may an analyst objectively determine the specific nature of corrective wave 2?  The answer to this important question rests in an understanding of the EW structure itself.  In this respect price always traces in shorter periods EW price patterns which will later appear in longer periods.  This is a most important feature of the EW structure which requires price to first trace in shorter periods then later the same in longer periods.    Study of the monthly chart price action does not answer that issue.  Examination of shorter periods will answer that issue.

 

Weekly;

Solid vertical lines identify motive waves 1, 3 and 5 down to longer term Wave 1 low.  Corrective waves 2 and 4 are red dashed lines.  Divergences and fractals are present at their required locations in a down cycle.   RSI lowest value identifies wave 3, later higher RSI value at wave 5 and a CPD.  Corrective wave 2 has three waves higher (observed in the daily period) not observed in the weekly.   Completion of  wave 2 is a full impulse 8 waves lower.  The only corrective pattern which traces this pattern is the zigzag which most often is observed as a wave 2.  This pattern will later be traced in the monthly period.  In the weekly this zigzag will be plainly traced to its C/wave 2 low probably around 78.6.  

 

Price is presently searching for corrective wave A low.  Wave A will be an impulse wave (5 waves down, 3 up).  Wave B will be three corrective up and wave C/2 will be another impulse wave.  This is the definition of a zigzag pattern.  It is being traced at wave 2 its expected location.

 

Price has most recently traced corrective wave 2 identified by the most recent fractal.  RSI traces below its 50 line, both MACDs at or near their zero lines suggest price is now searching for shorter term motive wave 3. 

 

Comments;

It is required that the longest period available be studied and permanently marked with vertical lines identifying EWs.  Currency, commodity or equity.   Shorter periods permit more accurate  identification of EW highs and lows using the objective features mentioned above.  These EW lines appear in shorter periods and assist in entry with lower DD. 

 

Many traders do not understand EW and therefore have  no idea where price is located in the EW cycle.  EW  trading only becomes practical when the analyst is able to apply uniform objective rules and features to price behavior as its traces through this cycle.  In this regard, RSI, divergences, fractals, Fibonacci studies, price patterns and momentum decay or recovery are all relevant to this analysis.

 

It is important to recognize that corrective waves A and C may be impulse waves in the case of a zigzag correction.  Some hold the mistaken belief that waves A and C must always be 3 wave events.  That is not so.  

 

ETFs long or short may be used to trade the NASDAQ.  This equity market is not manipulated like many discreet equities, commodities and currencies.

 

I invite others to post their charts and analysis re these issues. 

 

Best wishes for a happy and successful new year. 

 

Loren

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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