EURUSD Forecast (24 May 2012)

After my session with Ray and FuzzyLogic, I decided to re-do my wavecounts all the way from the weekly timeframe down to the lower time frame.  It’s something I used to do, but I got lazy…. so here it is.

Weekly

Daily

8 Hourly

Not much additional information from the Daily to the 8 hourly.  So let’s see if wave v of 3 is completed.  Down to the 15min.

15min

Looks like wave 3 has yet to complete.  If wave .iii has completed, expect wave .iv to stagnate or end around 1.2650.  It has some good fibb convergence and S&R levels.

That’s it for my wave counts.  Take care out there!

AUDUSD Forecast (23 May 2012)

I had the opportunity to meet up with RayG and FuzzyLogic from the forums in “My Trading Room”.  Thanks for joining in!

Both of them had a really great way of trading, and I’m thinking of making FuzzyLogic my mentor in price action trading. Haha!

During the session, I had an extensive session with RayG on wavecounts on the AUDUSD on a weekly timeframe.  There was some different in opinion, but RayG’s inputs helped me solidify my thinking and pushed me to think of alternative wave counts!  Thanks for getting rid of my laziness!

Forecast (Weekly Timeframe)

Here’s the forecast:

Preferred Count

’m counting a complex correction for wave B on the way right now.  If wave Y unfolds and goes beyond 1.10930, that would make my entire ABC structure an expanded flat, and bring the C wave all the way down to around 0.84967 which is

1. within the 50%-61.8% retracement, and
2. also within the price zone of the 4th wave of the one lesser degree.

If my preferred count is correct, we would have completed (or is completing) wave b of Y and would be facing a turn around soon. I’ll be looking for fractal breakouts in the lower time frame to enter the market.

Alternate Count

For the alternate count. In seat of a complex correction.  I’m counting my wave W as a completed Wave B, that makes us currently in a Wave C decline which is yet to complete.  What keeps me away from this count is that the move recent move down looks a lot more alike a zig-zig than a impulse wave downwards.

So time will tell, and I don’t typically trade on the weekly and daily timeframe. But it gives a very good overview of the general direction for trading my lower timeframe.

How a Simple Line Can Improve Your Trading Success

Elliott Wave International's Jeffrey Kennedy explains many ways to use this basic tool

The following trading lesson has been adapted from Jeffrey Kennedy's eBook, Trading the Line -- 5 Ways You Can Use Trendlines to Improve Your Trading Decisions. You can download the 14-page eBook here.

"How to draw a trendline" is one of the first things people learn when they study technical analysis. Typically, they quickly move on to more advanced topics and too often discard this simplest of all technical tools.

Yet you'd be amazed at the value a simple line can offer when you analyze a market. As Jeffrey Kennedy, editor of the new Elliott Wave Junctures service, puts it:

"A trendline represents the psychology of the market, specifically, the psychology between the bulls and the bears. If the trendline slopes upward, the bulls are in control. If the trendline slopes downward, the bears are in control. Moreover, the actual angle or slope of a trendline can determine whether or not the market is extremely optimistic or extremely pessimistic."

In other words, a trendline can help you identify the market's trend. Consider this example in the price chart of Google.

That one trendline -- drawn between the lows in 2004 and the lows in 2005 -- provided support for a number of retracements over the next two years.

That's pretty basic. But there are many more ways to draw trendlines. When a market is in a correction, you can draw a trendline and then draw a parallel line: in turn, these two parallel lines can create a channel that often "contains" the corrective price action. When price breaks out of this channel, there's a good chance the correction is over and the main trend has resumed. Here's an example in a chart of Soybeans. Notice how the upper trendline provided support for the subsequent move.

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How to Become a Master Trader in Record Time

Some readers told that they found the "3 Keys To Successful Trading" extremely useful, and would like to have more write-ups on the topic. Ask and you shall receive!

I wrote a new article titled "How to become a Master Trader in Record Time".  Well, basically, how can you shorten the time it takes for you to be successful at trading. I'll not replicate the article in this post, so here's the link:

You can also access these articles directly from the top of the screen. Good luck with your trading!

Triangles offer an important piece of forecasting information

Triangles offer an important piece of forecasting information
By Elliott Wave International

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I began my career as a small trader, so I know firsthand how hard it can be to get simple explanations of methods that consistently work. In more than 15 years as an analyst since my early trading days, I've learned many lessons, and I don't think that they should have to be learned the hard way.

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Jeffrey also discusses corrective patterns which includes the triangle formation. Here's an edited eBook excerpt:

Triangles are probably the easiest corrective wave pattern to identify, because prices simply trade sideways during these periods. [The graphic below] shows the different shapes triangles can take.

....triangles offer an important piece of forecasting information -- they only occur just prior to the final wave of a sequence. This is why triangles are strictly limited to the wave four, B or X positions. In other words, if you run into a triangle, you know the train is coming into the station.

Jeffrey goes on to provide three real world examples of the triangle price pattern. Here's one of them with his accompanying commentary.

[The chart above] shows a slight variation of a contracting triangle, called a running triangle. A running triangle occurs when wave B makes a new extreme beyond the origin of wave A. This type of corrective wave pattern occurs frequently in commodities.

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EURUSD Trade Review (16 May 2012)

If you had been following my EURUSD forecast, I had been very excited about counting the “completion” of my five waves.  Alas, my trade was botched.  Here’s a chart of my wave counts and my entry (Green Line) and stop (Red Line).

Here’s my personal review of the trade:

1. Was I diligent in monitoring the price movement? - Y
2. Did I have alternate wave counts – N
3. Did I follow my trading rules? – Y
4. Did I follow my money management rules for individual trades? – Y
5. Did I follow my guideline on max number of concurrent trades ? – Y (I had EURUSD, USDCHF, AUDUSD running at the same time)

I need to be more diligent in having alternate wave counts.  Where else can I improve?

1. Always go back to higher timeframe to look at overall wave movement.  Especially when I dig down into so many degrees / levels.
2. One thing I’ve been thinking of including in my trading plan that I have not.  Similar to what Robert Balan proposes – If the stop is hit, enter a trade in the reverse direction (not more than the size of the initial trade).
   
   In his words - “The purpose of the net short position is to try to recover all or enough of the losses from the long trade so as to prevent the capital from being impaired.  A bigger stake on the downside is unjustified at this point. “
   I’m not so comfortable with entering into a trade automatically in the opposite direction as this point, but will look at how this will limit the loss incurred from the trade.

Alright, that pretty much sums up my trades.  It’s back to the drawing board, I’ll post my next forecast when it’s ready!

EURUSD Forecast Update v2 (15 May 2012)

There we go! I’m counting my wave 5 from hell completed as the price reversed nicely and looks fairly impulsive. Still, keep your stops tight, and watch the prices closely.

Good luck with your trading!