Theorem - An educated guess based on a set of established rules
In analysis, this is all we do. Is put together an educated guess. How well the guess does is based very much on the person who is doing the guessing. A history of guessing well leads to a system that performs well over time.
So what I am showing here is a part of my system that I employ to make my "guesses" as to what is to happen. Yes, I know what I do is somewhat more complicated and in-depth than others. But I'd like to think it's complicated in a simple way. It's more hard work than anything else. But who said trading was supposed to be easy? Only those that are continuously looking for the Holy Grail, I suppose.
Anyway, what I am showing here is 2 different wave counts. One is the overall wave count of the price action (left). The other (right) is a wave count based ONLY on the internal wave structure of the POTENTIAL Bat. Yes, advanced patterns do have their own internal wave structure that is independent of the traditional overall wave counting. And they don't necessarily need to "fit" into the overall wave count to be valid.
The reason I wanted to show this side-by-side is to show you part of the process that I employ to analyze charts and make my trades as high probability as possible. When you look at the 2 charts, you'll see that there are plenty of similarities. But there are also subtle differences. It's when the differences between the 2 match up that there is a high probability trade that could occur. We had that with the drop from the wave 2 down. Both were calling the same thing.
But what we have now is some slight difference of opinion between the two. If you'll look at the current price action, what you will see is that in the left chart, I am seeing a substantial retracement of a COMPLETED wave ( III ) whereas on the right chart, the wave 3 is NOT finished, yet I am still seeing that there is to be some form of upward movement in a SMALL retracement of the wave iii of 3. When that wave iv retrace is done, then prices would head down probably sharply to complete the wave 3. Then we will see a larger retracement up in a wave 4 before finally dropping to complete the Bat in 5 waves.
So what both charts essentially are saying though there is a difference of how, is that there is much more downside to come. But in the current, both charts are showing that there will be some upward price movement coming. Just a difference of how much is all.
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Please keep in mind that I am not giving any trading signals or trade calls here. Only providing my own trade thoughts for your benefit and insight as to my trading technique and style. Please don't ask if you should or should not take the trade or ask for stop loss and take profit levels. Any SL or TP given on my trades are my own I have used for my trade and are not recommendations for you to use. If you are not sure, then you do not have a trading plan for yourself in place. I suggest you make one before you continue to do any trading!
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