AAPL is in a bearish AB=CD corrective wave from the most recent down trend in my honest opinion. Which could also be seen as an alternate bearish 5-0. I have extreme doubts about AAPL testing old highs anytime soon. In fact it is more likely to make lower lows. The markets are topping and we will see a correction soon. It doesn't matter how large the correction will be, AAPL will more than likely follow the S&P down. The euphoric bullishness surrounding this name also makes for a bearish case. at the very least I believe we will retest the lows around $400. In the very near term we still have at least a $40 upside to test $580 completing the AB=CD. We could test $600 which would complete the bearish alternate bat. After that though I personally will be entering short on this name.
Comments
dp
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Thanks, I've got "Trade What You See".
Nen, Poruchik at all are generating dozens of new harmonic patterns. I am puzzled -- what criteria of their validity they use? The new patterns must at least satisfy the condition of statistical significance, like 70/30 probability of realization, right? I've never seen they discuss backtesting of the new patterns, only like '...XYZ proposed new wonderful pattern...'
Are you limiting yourself by Carney/Pesavento limited set of patterns, or extended Nen/Porichik style?
Also, I am having trouble with Carney definition of XABCD patterns. What I mean, if you calculate DA versus XA through his relations XA -> AB -> BC -> CD -> DA, you'll come to contradictory numbers. Pesavento doesn't exploit intermediate relations as Carney does.
climbing_stars
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I am all for new harmonic patterns if they are successful. This is a link to success rates of harmonic patterns compiled by FxGroundsworks.com trade-forex-harmonic-patterns.com/harmonic-pattern-success.html. As you discussed backtesting is important. For example if the nen star pattern when tested and only yielded a success rate of 50% that wouldn't be worth trading. Especially when there are patterns that yield 80-90% success rates. As far as Carney goes he is far too intolerant of price exceeding the PRZ. Markets will not always reverse at the first tag of these levels. To completely disregard a good trade because of this is ludicrous. After trading these patterns for years you learn that the PRZ more often than not is exceeded. I do not completely agree with Carney, Pesavento, Nen, or Porichik. I believe all the information about harmonic trading is viable. But you must come to terms with your own trading style. I don't believe in following these guidelines exactly due to the fact that the market doesn't always behave in an organized matter. You will find out that some stocks/fx are more harmonic than others. You will find patterns that are more successful for you than others. It's all about developing your own plan based on the information available to you. You chose a good path though. Price action patterns are by far the best way to trade. Hope that helps! good luck.
dp
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Thank you and good luck to you too!
dp
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Love your approach.
You must be familiar with Nen and Poruchik, aren't you?
climbing_stars
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Thank you. I am familiar with them. If you are interested in harmonics, check out Larry Pesavento. His book profitable patterns for stock trading is still one of the best books I have read.
vlad.adrian
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idk if u have seen this, but this hole uptrend was an AB=CD. it stopped at the 100%AB forming a double top. Apple does this ab=cd quite often, i remember finding some in the big fall last year.
climbing_stars
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Are you talking about the most recent uptrend from 2011-2012? If so there is no AB=CD present. I see a bearish bat that formed on 4-9-12 and finished on 9-21-12. The reseult was the most recent downtrend. Other than that AB=CD patterns happen frequently on all charts. They are extremely effective when used as a corrective matter against the dominant trend. As is in this case AAPL is in a corrective AB=CD (wave) up from the dominant downward trend. Not to say it can't break the pattern and go higher. We will have to wait and see what unfolds.
vlad.adrian
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nope, im talking about the most recent uptrend :
A - 28.06.2013
B - 19.08.2013
C - 17.09.2013
D - 5.12.2013
BC = 50% of AB
Double top - 05.12.2013 and 24.12.2013
climbing_stars
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I know that's an AB=CD that's the chart I posted. It is the corrective wave up. But it isn't finished yet it still has to tag $580 and honestly it will probably tag $600 before heading down again.
vlad.adrian
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sorry, got confused cuz u took the first low and not the second :)
Nen, Poruchik at all are generating dozens of new harmonic patterns. I am puzzled -- what criteria of their validity they use? The new patterns must at least satisfy the condition of statistical significance, like 70/30 probability of realization, right? I've never seen they discuss backtesting of the new patterns, only like '...XYZ proposed new wonderful pattern...'
Are you limiting yourself by Carney/Pesavento limited set of patterns, or extended Nen/Porichik style?
Also, I am having trouble with Carney definition of XABCD patterns. What I mean, if you calculate DA versus XA through his relations XA -> AB -> BC -> CD -> DA, you'll come to contradictory numbers. Pesavento doesn't exploit intermediate relations as Carney does.