The problem with Theory is it's extreme subjectivity. Finding an exact wave count & forecast is extremely difficult; E.W.'s are subject to error when projecting targets considering there are several different places they can eventually end. If by chance you have mastered the count as a trader you watch for the typical ending point but the move is always affected by a number of factors including , strength, and black swan events.
In my trading career I have stayed away from using E.W.'s as a signal indicator, I typically do not rely on them for trades but lately I have been working on a way to confirm the strength & length of a wave that I will not be explaining today as it is lengthy. But, I will at some point in the near future be putting everything I am doing on E.W.'s into one single indicator & system for public sale. Until then, my analysis will factor the system in but not rely on it nor be explained. Again, Theory is still subjective even with a low strike rate confirmation system.
Keep in mind when using E.W.'s you must be fluid in your projection and capable of admitting you were wrong on certain variations and adjust accordingly. Also, never stop using your basic trading and analysis rules just because a wave conflicts with other data.
Using the 4 hour to get an expanded view of our larger time frame moves we completed a intermediate 5 wave push as labeled. There is a larger wave taking place simultaneously that peaked impulse 3 at the same point of the intermediate wave endpoint labeled (5). Logically, this is a reversal point for those impulses and a corrective wave must be looked at.
Based on E.W., rules the larger E.W. move has a landing place for wave 4 shown on the chart in the bluish box on the right. However, as mentioned above E.W.'s can have multiple landing points, shown there is a typical wave 4 end point based on E.W. rules. There are extended waves that can be confirmed thru logical assumptions and confirmation of other factors which I will get into.
Looking at the intermediate wave that finished its 5 wave sequence, I've examined the major support levels & other factors on multiple time frames and concluded that the corrective wave shown (A)(B)(C) is the most logical path being shown.
Our first pause was directly above the 38.20% fibonacci retrace point. (Fib levels are not an exact science either FYI) What I am looking for here is for the & to cool down and reveal chop action for a while within the yellow box shown then break down to the yellow box below completing corrective wave (A).
The Guppy Multiple Moving Averages (GMMA) needs to correlate with price action and pull itself out of oversold conditions also. The sideways/chop action will do so & offer a bit of relief there before continuing downward.
Taking a look at our indicators and more particularly the , we see a heavy decrease in buying from that dip.
On the O.B.V., sitting at the horizontal line in yellow we can trace past price action and see that price levels were not maintained at this O.B.V. level. The logical place to assume the end of wave (A) is past price levels at this point on the O.B.V. which ranges in the lowest yellow box shown where wave (A) ends.
The horizontal blue line on the O.B.V. indicator is where I speculatively see the corrective wave ending due to the peak of the prior O.B.V. range.
Corrective wave (B) is difficult to map out accurately. That I am leaving fluid as price action develops and wave A ends.
Wave (C) took some convincing for me to place. I typically like to see a retrace point at 61.80% on the fibonacci for a satisfied correction. Matching that with the larger typical wave 4 ending point I see corrective wave 4 being a slightly extended wave with both wave 4 and the (A)(B)(C) finding an end point in the green box at the bottom.
This end point would line up with E.W. rules, but also is verified through the (Right side) value area and prior consolidation range.
Theory is exactly that, a theory. Not absolute or undeniable.
As with all trading strategies and indicators nothing is absolute. However, requires you to take all data present and confirm it through multiple data sets and inputs. As I begin to explore more ways to do analysis in my trading career I find something every few years that allows me to fine tune and expand my accuracy with my analysis.
I believe there is a method that is rarely used to place E.W.'s correctly. That being said, they are still subjective no matter the accuracy of placement with E.W.'s when following their data-set rules. It also requires a lot of focus and analysis to properly identify and accurately project the moves that doesn't always play out due to their subjective nature & complexity, not to mention any unpredictable events that may occur.
As with any setup, there is a proper way to trade. None of the trade opportunities are detailed in this, there is more to trading than just seeing entries and exits and placing orders without considering proper entry and other factors including E.W.'s subjective nature. As the price action continues I will try my best to update publically the trades I am taking and the proper entry, stop loss, and take profit for each swing.
If this plays as I have detailed and support holds, then I have several visible factors I have been searching for to confirm the bottom of our bear market and the beginning of a bull market. I will update those in a later post that is more detailed on the overview of our correction cycle.
Thank you for reading and please be sure to click like on this analysis. Thank You!
This is not financial advice, this is simply my personal analysis of the current conditions.
Please do your own research and use my content to educate yourself.
Anyway, the more I learn about Elliot wave theory the better I get but i totally agree that it should not be taken religiously (as is the case with pretty much any analysis in it of itself).