Admittedly, I've had a rough time of it with my last 2 trades on this pair trying to predict the end of this crazy consolidation triangle that I am labeling a wave 2 of (5). And there was some hesitancy on my part to post this trade as I hate to give anyone following my trades yet another bad trade idea. But in the end, I must trade what the charts tell me to trade. So I have decided to post it anyway but allow each person to decide for themselves its' validity and usefulness.
Although I managed to stay away from the craziness from the beginning of the wave 2, trying to catch the ending of it has recently got me somewhat confused. But that is the nature of corrective waves. Most traders (including myself) tend to lose money during those waves. Trick is to control the losses.
But here, what I am doing is trying to get the best possible entry into what I believe according to my wave count to be an upcoming wave 3 move. This pair STILL has more upside to it to finish the final wave V of the main trend. I believe that it is pretty close to the top soon but still not yet. I know that there are those that are saying that the top is in. I'm not one of them. So here, I am AGAIN taking a LONG position now in this pair hoping to catch the beginnings of a wave 3 move. Looking at the wave count and the recent price action, this entry is a pretty good value entry. I've taken the entry as there is a COMPLETED bullish bat that has just completed and also seeing bullish price action now. There is also a POTENTIAL bullish DEEP crab that is NOT filled. Missed the D point by only a few pips.
The recent break down out of the larger triangle could be a false break as well as a true break out of the smaller ending triangle (red TL's) which has reached its' profit targets. If prices do continue up, it will reach a CRUCIAL POINT (marked on the chart) where it will retest BOTH trend lines of the contracting triangle. Should it break through this point, LOOK OUT! We could be looking at a substantial move up from there!
4Hr Chart Overview Of The Recent & Current Consolidation
MY TRADE PLAN I'm now LONG in this pair and am watching the price action from now until the FOMC to see what it tells me. If prices should reach the TP1 and/or TP2 of this bat before the FOMC, I may err on the side of caution and close this trade either partially or fully depending on PA. I am putting my stops below the 2.618 fib extension of the DEEP crab in case prices do fall back down to complete the DEEP crab. This is a point well within the PRZ of the DEEP crab.
*DISCLAIMER: 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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Thank for your input and giving me some clarity. I am familiar but have never seen it or be able to pick it. I completely understand you’re a busy man so I appreciate your response. I’ll look into that book and brush up on my knowledge.
donaldsaw
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I thought I had it right based on EW (forexhit.com/images/triangle-elliott-wave.gif) with a point A counted at the first retracement - please correct me if I am wrong but this is the theory. I do agree that this is highly complex and looking deeper into it will only make you more confused. With that said. the invalidation point (131.532 point E) hasn't crossed.
EverythingForex
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Donald, technically, you wouldn't be wrong. BUT, this is the part where there is a big hole in EW theory. Elliott talked about something called "wave extensions". Are you familiar with that? Problem with extensions is identifying them. Extension happen in wave 5's. So in this case, this triangle could be labeled a wave 4 with the beginning of that triangle pattern being an wave 3 extension. That's one way to see it. The other way to see it is that there is NO SUCH thing as wave extensions! And that wave 3 ended at the high point BEFORE the beginning of the triangle. If seen that way, then the small wave leading up from the ending of wave 3 up to the start of that triangle is actually a wave A of an ABC wave 4. It's complicated and I know trying to explain it in words is just making it more confusing! I'd do a chart and explain it but as you can understand, right now, is a VERY BUSY moment before the FOMC and just too busy managing my trades. We can discuss it at length some other time as I'd like to get your input on that as well. But read Ian Copsey's book: "Harmonic Elliott Waves: A Case For Modifying RN Elliotts Wave Theory". He has a good take on the wave extensions problem.
donaldsaw
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I've been trying to figure how this pattern is developing as I am seeing a clear EW triangle in wave 4 (See Link) but the price action keep dropping lower which is different other triangles I've traded before. Do you have any thoughts on what is driving this?
EverythingForex
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Donald, I believe you are not labeling the triangle correctly, my friend. Here's how I had it labeled before but even that may have been wrong. It's a highly complex corrective wave. To the point where I'm not really bothering to try to break it down but just looking at the big picture.