This is based on the Nikkei 225 price action from late 1987 to 1990. The existing action fits well, we are now at early November 1989.
This chart presumes one more fast ramp by SPX to 2620, then a sharp 18% fall wiping out all the Trump gains. This would be followed by a 50% rebound, and then further falls into the next few years, eventually reaching the 2007 high of 1572.
if we take Nikkei Oct 1987 till its peak, it's a bit more than 2 years. That should bring us to 1Q 2018 (Feb 2016 + 2+ years), not Oct 2017. Why do you often do such tricks?
elroytrader1
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@AlbCM, It's not an exact time match in fractals, in other words, I often stretch or contract the X-axis overlay to best fit the other instrument. This is, IMO, still valid theory, for example if the overlaid instrument was running at lower volume, the price/action would be slower. I think in fact that there is some degree of time expansion or contraction on all my fractals (I have done dozens), and the subsequent price/action turns out right more often than not.
AlbCM
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@adatherton, ok, I understand how you stretch\contract x when you look backwards - simply tweak it to fit past values. But how do you decide whether to stretch\contract x after?
elroytrader1
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@AlbCM, Very good point. I find a pattern that matches another one, timeshifted of course. I then use TV's 'bars pattern' to grab the older one, going past the 'now' point on the newer one. So any stretch/compress of the past applies to the future as well. I don't really care about time that much, doesn't affect the trade outcome I am rarely more than 40% [of available cash] invested. A lot of my past predictions have worked but more slowly or quickly that the fractal predicts.
For example a piece of news (in the right direction) may rapidly accelerate a trend, a piece of news in the wrong direction may stall the trend, and it may need the next piece of news to continue it. On the long-term charts (like this one) it's not so much of an issue as there's good and bad news every week.
But note I need 100 point spike down/up even on June 18th. Chances of that happening are virtually zero, so the chart probably won't behave like that. The reason I posted though is that when you take the fractal into the future, the future predicted pivots fit very well with existing support points and technical levels (ie 50% retracements).
The thing is, that these things work until they don't at which point I abandon them. Some have worked very well in the past. Everything is about looking for a distant target, then I trade with a tight stop in fairly small amounts. This is a long-term one, most of my fractals are 1H charts, looking to stay in the trade about 3-4 days. Check the others, I am getting (a little) more than half of them right, with RRs above 2:1.
AlbCM
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@adatherton, thanks for such a detailed answer. Yes, a lot of your charts do work - otherwise why would I be asking for clarification then, right? So you are in essence saying you normally try to apply the same ratio to the future as used in the past but are kind of flexible because it's not that much important.
As for this particular pattern, I also see there is still a lot of upside for the Dow\SPX and subsequent decline similar to Nikkei 90s both price- (> 50%) and time-wise (> 2.5 years). However, I see we have some more time to reach the top at least till Mar'18 (June at the latest). There will be a small correction (< 10%) till November and then a big move similar to the one we had post-election.
elroytrader1
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@AlbCM, The reason for the 100 point spike idea is that if the 3-wave was the same length as the 1-wave, it would end at 1915, not 1815