Work in progress.

[Steely Dan]

Ok Here are some charts of the Hang Seng. Please note they are from my practicing to count NewR and I have not gone back to get a long term fix so everything is relative not absolute. By the way the Hang Seng does seem to behave as a bit of a leading indicator for the Dow over the last couple of years.

There are 3 charts in chronological order, the 2 min chart has colour coded horizontal lines for the bottom of RTB 4th C waves, I was counting real time at the time the black 4 low was made and went long seeing an instant rally of 100 points from then and 'knowing' if my count was right there would be at least 100 more to come.

[finster869]

Steely- Great charts, thanks for sharing. When did you jump in, after it crossed the prior RTB at 20800ish, or earlier? If earlier, how did you know that the "pivot" occurred? Were you just confident in the count, or was a smaller internal © of an RTB 4th broken?

[Steely Dan]

Finster, 20656 was the mid price when I put the trade on. My reasoning was as follows; Red wave 4 should take the form A-B-C. The wave 'B' low was 20615 so by going long as close to that line as possible gave me the best possible risk to reward ratio. As you can see on the 2 min chart the labels leading down to the eventual low of 20634 were not put in because already I was losing definition on a 2 min chart, so I had to work quickly to put the trade on knowing I was risking about 50 points for a return of say 250 and if I believed in my counting the odds should be better than evens.

[finster869]

Makes perfect sense. Nice job. Do you know the answer to the question I posted in the other thread regarding whether the c wave of the 2nd needs to be deeper than the a since it can't be a "failure"? If so, can you answer there. Thanks.

[Steely Dan]

OK, A good news bad news story. The bad news, the larger count was wrong and what I had labeled red 3 turned out to be a C. I'm not happy that I missed the RTB which must have accompanied red C, but the good news is that using price confirmation to trade meant I avoided going short by a margin of 3 points when a new RTB C wave was made at 20992 just above the previous 20899, after that the market took off.

Side note: As I remarked on another thread narrow failure to take out an RTB 4th's C wave end seems to lead to a large move in the opposite direction - I'm of the opinion that close to the end of the C wave a good strategy is to trade as if the extreme will hold and stop and reverse if it doesn't.

The market has continued making candidate RTB's the latest two are at 21191 and 21094

[TS Hennessy]

Nice Work Dan!

So you must be in a 5th now then?

[Steely Dan]

(03-09-2010 03:46 AM)TS Hennessy Wrote:  Nice Work Dan!

So you must be in a 5th now then?

Thanks Tom, Yes a 5th of what degree?

Ok, I really think I'm on to something here. We are looking for major pivots but how many rivers do you need to cross to get to the river of Jordan? And you do need to eat on the way.

From my previous observations I noted that a deep retracement of an RTB C wave which narrowly fails to take out the end of the low often leads to a good opportunity to hop on the prevailing trend at little risk and a defined reward.

(See the first chart for one from yesterday, the day before provided similar).

Now please forgive the inconsistent labelling between charts but the next carries on through 1 day. The boxed 4 in the second chart is basically where I went long the previous day. Note how the market has kept working down through successive degrees. Note how there was another opportunity to go long at 21260.

Finally subsequent market action proved I was wrong and so I took a view a sneaker C wave had made me miss the top so I adjusted labels and went short on the first retracement. (See third diagram).





Note: Tom gave good advice to watch multiple timeframes, so you don't get lost in the matrix.

[Steely Dan]

Update. In my excitement at having a short triggered I forgot to count

The enclosed chart shows that the first stab down looks to b 3 legs - Is this a 1-2-3 in it's own right or is it Red A as I have labelled it? I also spotted a candidate RTB with what I have marked as purple 3 so I feared that after 5 waves down that could be correction over, hence the black boxed 4. I took profits the moment 5 made new territory.

I now need to think what the market should do if it is heading up again and start the process over again.

Conclusion: If you go through 4 or more iterations of RTB's en-route to a major turn why not trade them with the trend for low risk?

[finster869]

How do you know that your square wave 4 is complete? Don't you need to wait until 21,230ish is reached, so that you pass the start of purple 4? Couldn't the move up from purple 4 be another 1-2-3-a-b-4, with 3 having completed, and the current move back the "a"?

[Steely Dan]

(03-10-2010 06:40 AM)finster869 Wrote:  How do you know that your square wave 4 is complete? Don't you need to wait until 21,230ish is reached, so that you pass the start of purple 4? Couldn't the move up from purple 4 be another 1-2-3-a-b-4, with 3 having completed, and the current move back the "a"?

Yes, of course you are right in what you are saying, even though subsequent events moved trade above the start of purple 4 (Note there still is a motive downwards possibility) however from where I went short it was good business to bag some profits knowing my uncertainty would resolve later and I could hop on a downward 3 or C at a later stage if it worked out that way.