At this point, the expected rally towards 260.00 remains in force, as price surged and carved a higher high, and is now likely to have found that once-resistance/now support in the geometry's 1-3 Line.
The Fibonacci scale highlights correlations with the foreground geometry, wherein its 1.414 represents its reversal level at the geo's 5-prime, its 1.000 highlights the geo's conservative trigger level, namely Point-3, 0.618 defines the approximate level of Point-4, which defines a high-probability of attainment, whereas the most distal, at 0.786 represents a possible completion level.
These levels are likely to be visited at the probability rate defined here, but the overall picture remains submissive to whims, per Predictive/Forecasting Model.
Predictive Analysis & Forecasting
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First, to be clear, this exercise in market geometries has nothing to do with predictive/forecasting, which is a separate topic and requires the use of a model. Instead, we are looking at a geometric figure stretched over 5 points (1, 2, 3, 4, 5) with components (Lines 1-3, 2-4, 1-4 and ectopic points 5-prime and 5-second) that have a simple and consistent relationship to the whole (entire 5-point geometry) and its parts (lines and ectopia).
What I recommend is to simply draw the triangle that emerges from the 1-3 and 2-4 convergence, draw the 1-4 Line that connects points 1 and 4; then cut/paste the 2-4 Line so that it originates off of point-3.
What you have at this point is a "turn-key" pattern that will "speak" to you in the simplest terms possible. For instance, once price reaches the alignment of the 1-3 Line, it will define therein its final 5h coordinate as Point-5.
If price tends to excurse beyond that level, then see what it does it relation to the 2-4 Line that is projecting off of Point-3, and consider using that line as a reasonable visual for a reversal (whether you decide to use an actual stop-loss in your trading is a decision that is entirely up to the trader, since it may variably impact any trader's risk management).
Best practice would be to simply WAIT for a NEW candle/bar relative to the one that hit the 1-3 Line and defined Point-5. This allows the trader to gauge the development of price action relative to that Point-5, and see whether price incurs an adverse excursion (i.e.: wandering off and opposite to the desired direction).
Once price reverses back towards the 1-3 Line, I recommend to WAIT until this particular returning candle/bar closes across that 103 Line and not before, as crossing without closing would NOT do.
Once the crossing over and a NEW candle emerges, then a signal is emitted by this geometry, and a SL should be contemplated at the opposite end of the price action that wandered off, since this reflects the furthest price ever wandered.
The rest is simple a wait and see game, waiting for price to hit the 1-4 Line.
Looking at the entire price movement, the Geo trader needs to heed a larger system, one that engulfes the current geometry without invalidating it, while adding credence to the bullish targets.
In such a case, then Point-5 of such a larger system would place price to a lower lever in relation to larger geo completion - See following chart:
What I have added in the chart are:
1 - Geo Anchor (blue asterix), which is a concept I have defined as a quasi-conditional feature to define the best possible slope of the 1-4 Line
2 - A 1-4 Line that rises towards the defined targets.
3 - Tunneling, which remains a bit broad here. By tunneling, we are referring to the seemingly deliberate clearing of a visual path, through which the 1-4 Line is likely to project.
Implied, but not defined in the chart is the expected position of Point-4 of the larger geo, which by definition would occur upon price crossing the 1-3 Line of the larger geo. Using the high-probability that most of these Geos wil define a 5-prime point, then it becomes reasonable that once the 2-4 Line is defined in terms of a slope, that its projection off of Point-3 will help approximate the bearish depths to be reached, if ever.
There are a few rules about the Geo that may help screen through possibilities, so as be left with a fewer probabilities. One of the feature I like to believe may be of relevance more often than not are as follows:
1 - The 1-2 Leg is often a symmetrical ab = cd construction;
2 - The 2-3 Leg is often the longest and most complex internal skeleton of the Geo, expressed often as a W-X-Y-XX-Z zig-zag
3 - The 2-3 Leg often offers a near-midway inflection acting as an anchor ("Geo Anchor")
So, looking at your construction, one think that comes to sight is that your 2-3 Leg is too simple. Whether it ends up being the right construction or not is not a point to argue, as much as staying suspicious of too-easy an appearance, since most traders, especialy the pattern traders, will chase after the simpler symmetrical expressions, such as the ab = cd. However, this is often (not always) one pattern that we would let the 1-2 Leg own, while we would remain suspicious of any such development within the 2-3 Leg.
So, keeping an index of suspicion high, the following is what I would be willing to keep watching ... :
Next, I would look at the possibility of deciphering an early "Tunneling", since we have a Point-1 and a potential candidate for a Geo-Anchor (asterix) in the given, albeit unfinished field, as follows:
In this HIGHLY speculative illustration, I have left a question mark by Point-3 and Point-4, simply because there are yet too many unanswered geometric questions, such as the potential levels of 1-4 Line with their respective "Tunneling", as well as the fact that Point-3 can still find a higher residence, then cause price to roll further down than the lower side of the Geo, to carve out a nadir at Point-4.
So, looking for a geometry at this point would be too premature. Still, there is the one that you posted, which could work as an internal Geo, but a larger Geo would justify the rules outlined above.
Best is to trade the Geo as soon as you see a potential completion and reversal past the 1-3 Line in direction of the 1-4 Line.
In the case of your Geo, you did very well by pointing at the potential SHORT opportunity right as price crosses the 1-3 Line in the direction of the 1-4 Line.
What I would add is a DASHED line that is parallel to the 2-4 Line, but originating off of Point-3. This will help you define an objective level of Stop-Loss, since this level is OFTEN validated as price tends to exceed Point-5, and in this process defines the ectopic position of Point-5 as "point five prime", or simply Point-5'.
It looks like in your illustration would be doing this, except that your dashed line is NOT a parallel of the 2-4 Line, and it does not originate off of Point-3, but off of Point-1 instead. This is a VERY important geometric consideration, as in my experience, the probability of ectopic point-5 are as follows:
1 - Point-5' = Most common (Parallel of 1-4 Line originates off of Point-3 and acts as a Stop-Loss to price)
2 - Point-5 = Second most common
3 - Point-5" = Least common (Parallel of 1-4 Line originates off of Point-1 and acts as a Stop-Loss to price)
Keep posting them, and make sure to use dashed for ectopics, and dotted lines for 1-4 Line, just so as to keep the "visual vocabulary" the same across any chart. This will not only make the illustrations easy to describe, but most importantly, it will offer necessary repetitions to the mind's eye, so as to engrain and chisel the overall movements and make it become a second nature to the otherwise untrained eyes.
Great Geo you posted.
Thanks again for another fabulous reply! Greatly appreciated! I have incorporated most of your comments into this chart as a note for me and others. Hope you don't mind. I will need to read more on your comments around Geo Anchor and tunneling. A quick question related the anchor, should it be a high in the midway of a rising 2-3? Or it can also be a low in the midway? Thank you!
Any high or low should do. I have not really looked at what occurs the most, but so far it has not made much of a difference. Great question, though.
I am not seeing what you are seeing.
I am seeing higher-highs, higher-lows, all in succession to one another at a steady tempo, getting ever closer to the target:
In addition, the longer-term chart has broken its upper trendline, which is the "Spine" concept I have discussed before, suggesting that the Elliott Wave 3rd Wave impulse has been broken, and price is readying into a Elliott Wave corrective 4th wave. The end-product of this cycle is a completion of the EW at a lower value, as defined in the chart.
So far, price has remained in step with the forecast, and there has been no adverse excursion that have diminished the probability of the targets. Perhaps some material event occurred that is still escaping me.
In sum, price has carved out incremental ascensions towards targets, with retracement that would not break prior higher-lows.
If there was a discreet structural event to look for that would certainly invalidate this whole premise, then I would look for a lower-lows, something that has not occurred of late.
Feel free to elaborate, as I am not immune to biases, although the Model does do the thinking for me, and all that I am describing is mere observation of the recent structural activities, as described.
The rectangle is merely highlighting the break of that Spine, which would tend to herald a conversion from an Elliott Wave impulse ("IMP") to an EW correction ("COR").
I appreciate the vote of confidence by requesting some insight from the Model, but there are simple, steadfast rules that are worth keeping nearby, one of which is the structural analysis of price action.
Simply put, there are two possible trends: An impulsive or a corrective trend, but each will carve the exact same highs/lows, lower-lows/highs or higher-lows/highs.
An exercise worth doing is to color-code the moves, such that bullish advances are kept in GREEN and bearish advances are kept in RED, and threats are in ORANGE ... A threat would correspond to a price action that is still moving below a GREEN and above a RED.
So, a simple structural rule would go as follows:
GREEN = A new higher-high
RED = A new higher-low
ORANGE = A pending break of GREEN or RED.
The chart would thus look as follows:
$BTCUSD / #BitStamp - 2-Hour Chart:
$BTCUSD / #BitFinex - 8-Hour Chart:
$BTCCNY / #BTCChina - 4-Hour Chart:
As in any structural strategy, and given an UP-trend, the break of a prior low would constitute an EARLY signal for a potential reversal, whereas a break of a prior high would confirm a continuation. In such a case, the Stop-Loss would be moved below the unchallenged recent low (higher-low).
Without any indicator, quant-model or any fancy or obscure patterning, structural analysis should allow any trader to predict a potential trend reversal, simply on the merit of structures (highs, lows, higher-highs/lows, lower-highs/lows), regardless of the segment (in terms of Elliott Wave) or pattern price is occurring.
Yes, most of the institutional players will move price drastically. This is one of the premise in my analyses, where if something does not go as planned (i.e.: a forecast is missed at a particular timeframe), then something of a larger nature must have been going on that interfered with the plan.
My rule of thumb is that I take a 4-fold step-back perspective from the current timeframe, such that if I were at a 15 minute timeframe, then 15min x 4 = 1-hour timeframe, and 1hr x 4 = 4-hour TF, and 4hr x 4 would simply be elevated to a DAILY timeframe, and a daily x 4 approximates a 5-day trading of a weekly cycle, and 1-wk x 4 = 1 month.
However, I rarely dwell at the M15, except to calibrate some of the analyses. 4-Hour timeframes are what I consider "synthetic" timeframes, in which both retail traders (typically dwelling at the M14, H1 and some at H4) and institutional traders (H4, daily and 5-day dwellers) meet.
So, the charts I have posted in Bitcoin are kept at that level so as to maintain this "synthetic" perspective in sight.
Lookin at internal construct:
1 - The 1-2 Leg has its own symmetry (sort of a reverse symmetry - do you see what I am talking about?)
2 - The 2-3 Leg is typically a complex ZZ, such as a Double-ZZ or Triple-ZZ. Using the plots I have suggests above, you will end up with the complexity that characterizes this leg without compromising the entire elan.
3 - The 3-4 Leg is often a simpler symmetry, which by using the plots I have suggested above will provide this simpler construction of this leg.
4 - The 4-5 Leg need not be dependent on any internal construction, as much as it would require a Fibonacci cluster in terms of extensions, using the following keys:
a - 1.121
b - 1.272
c - 1.414
d - 1.618
Here is a visual along with an update just posted:
15 MAY 2015 - Update:
$BTCUSD: Refinement on probable targets; More tech-notes in discussion thread:
$BTC $USD #bitstamp #bitcoin #forex
Also this weekly trend line is really slipping now. The weekly candle closes tonight! Furthermore DrewR's classic EMA crosses signal came in on the daily.
Forecast remains intent on targets as defined in original analysis.
Based on te Geo's "OffSet Rule", Price has NOT attained its target, which rests at the price level corresponding to Point-4. For this reason, expect that the spike that occurred today points to the directional intention of price, but that it may not yet represent an exhausted rally.
Bulls have to climb that bloody murk of a hill and tend to long-term wounds.
However, looking at the longer term analysis, bears remain in charge. This means that on a short-term basis, bulls might be capable to bayonnette their way up the slippery slope, but bears have the upper hand, still.
A clear break above 297.95 would change the story.
I have found using wolf waves in forex on 3min timeframe particularly helpful in this way. Thanks. G
An alternate to WW is what I have described as the Geo, which comes with a specific set of internal geometric conditions. One of the trickiest aspect of a developing WW/Geo, especially if 1) it is on a much larger scale than a smaller one nearing completion and 2) the 2-3 Leg of the larger one is developing, is that it can take quite some time, simply because the 2-4 Leg construction is often reflecting an internal Elliott Wave complex zig-zag ("ZZ"), such as a Double-ZZ or a Triple-ZZ - (see free courses on Elliott Wave and pdf cheat sheet at http://www.ElliottWave.com for the professional referral source of this trading methodology - Mr. Robert Pretcher runs this site and is the only recognized professional source).
In contrast to the Wolfe Wave, whose completion at Point-5 calls for a reversal to its 1-4 Line, the Geo offers a high-probability target through its OffSet Rule, which states:
WOLFE WAVE RULE:
- If price reverses from Point-5, it will seek to attain the 1-4 Line of the geometry.
OFFSET RULE OF THE GEO:
1 - If price reverses from a 5-prime position, a high probability target rests at the price level corresponding to Point-4
2 - If price reverses from a 5-second position, a high probability target rests at the price level corresponding to Point-3.
In the following chart, price rose from a 5-prime position:
Per the OffSet Rule, it rose to the price level corresponding to Point-4, which is the target attained today:
What is also developing at a larger scale is a Wolfe Wave (BLUE plots), whose 1-4 Line may help define the extend to which price could rise:
I have used the "Geo Anchor" rule to APPROXIMATE the probable slope of this 1-4 Line - The Geo Anchor uses a structural level (i.e.: higher-high or lower-low) PREFERABLY within the 2-3 Leg of the developing geometry - Here, the anchor is lent through a structure along the 3-4 Leg instead, while Point-4 remains speculative:
Feel free to post a chart as a visual reference.
Not sure what you mean by L A L.