Classic Double Correction PatternThis is a classic example of Double correction (Double three) in HDFCLIFE.
Marked in the first box, we can see Flat Correction where wave B is retraced to the 81% level. We are fulfilling the minimum requirement (61.8%) of wave B. Here in wave C, we see three waves. This is the first hint of an upcoming complex correction. The whole wave is marked as W here.
In the second box, there is a perfect Zig-zag pattern. Wave B is retraced to 50% here. Also, we can see three waves in wave C, which gives us wave Y.
These two waves are connected by wave X which is retraced to 111%.
This is the best example of Double correction.
This analysis is for educational purposes only.
This analysis is based on Elliott Wave theory and Fibonacci analysis.
Fibonacci
Gold - Bookish example for Morning/Evening StarA typical example of Morning Star and Evening Star in the same chart. Its a good time to consolidate Gold
Evening Star
Evening star patterns are associated with the top of a price uptrend, signifying that the uptrend is nearing its end
The first day consists of a large white candle signifying a continued rise in prices.
The second day consists of a smaller candle that shows a more modest increase in price.
The third day shows a large red candle that opens at a price below the previous day and then closes near the middle of the first day
Morning Star
The Morning Star pattern is a classic bullish reversal pattern in technical analysis. The pattern consists of three candlesticks: two large ones with different directions and a smaller candlestick between them.
Classical example of Elliott waveClassical example of Elliott wave.
Wave 2 retraced to 61.8% forming Flat correction.
Wave 3 extended to 161.8% forming a normal or trending impulse.
Then wave 4 retraced to 23.6% in Zig-zag form. (This fulfilled the Rule of Alternation)
Wave 5 retraced exactly to its minimum target of 127% retracement. Where cluster of 200% extension was also there. Wave 5 formed in typical Ending diagonal format.
Here bigger wave 1 completed.
Now fall will come in NUVAMA forming bigger wave 2.
Bitcoin Crash Incoming? | Elliott Wave Theory Market ForecastGreetings, fellow traders,
In this post, I employ "Elliott Wave Theory" to analyze and predict Bitcoin's price movements. The decision to utilize this theory stems from its robust framework for interpreting market cycles, which is essential for precise forecasting in the volatile cryptocurrency market.
1️⃣ The value of an asset directly reflects the sentiment of investors participating in the market.
2️⃣ When investors are optimistic, increased demand naturally drives prices up, while fear among investors leads to price declines.
3️⃣ Prices are a direct representation of investor sentiment, and the "Elliott Wave Theory" is a framework that patterns these price movements.
✅ Conclusion
By applying the "Elliott Wave Theory," it is possible to anticipate Bitcoin's next move.
Therefore, let's now dive deep into the "Elliott Wave Theory" to both predict Bitcoin's next movements and gain a thorough understanding of this theory.
—
✔️BTCUSDT.P / BINANCE / 8H
This chart review covers the period from January 24, 2024, to March 14, 2024.
During this timeframe, a rare "Double Extended Impulse Wave" pattern appeared, characterized by an extended 5th wave.
The supporting evidence for this pattern is as follows:
1️⃣ A breakout from the 1-3 trendline.
2️⃣ The 3rd wave extended beyond 1.618 times the length of the 1st wave.
3️⃣ The 5th wave extended beyond 1.618 times the length of the 3rd wave.
4️⃣ The 4th wave took longer to develop compared to the 2nd wave.
I will explore these points in greater detail with the accompanying chart analysis below.
—
✔️BTCUSDT.P / BINANCE / 8H
This chart includes the evidence discussed earlier, specifically the first point mentioned. (Reference: 1️⃣)
In wave analysis, trendlines play a crucial role. A break in the trendline often signifies the end of a wave or highlights the unique characteristics of that wave.
In this post, we'll focus on the waves marked on the chart, so please pay close attention to the attached chart.
The extension of the 5th wave is significantly influenced by the trendline connecting the peaks of the 1st and 3rd waves.
This trendline is especially important in the context of a "Double Extended Impulse Wave."
A "Double Extended Impulse Wave" indicates a strong buying momentum in a bull market or a strong selling momentum in a bear market.
Therefore, it is expected that the upper trendline (the 1-3 trendline) would be breached as the wave progresses.
(leading to a sharp rise in a bull market or a steep fall in a bear market).
Please refer to the chart provided above.
There are five instances of "Over shooting" , indicating a strong bullish market.
This example shows how a single trendline can help identify the market's strength, weakness, and the type of wave pattern in play.
Now, let's move on to the next chart.
—
✔️BTCUSDT.P / BINANCE / 8H
This chart includes the evidence discussed earlier, specifically the second and third points mentioned.
(Reference: 2️⃣3️⃣)
Additionally, this chart illustrates the internal Fibonacci ratios of the extended impulse wave.
The characteristics of the internal Fibonacci ratios for an extended 5th wave in an impulse wave are as follows: (Satisfied: ✔️ / Not Satisfied: ✖️)
✔️ The 3rd wave rises between 100% and 261.8% of the length of the 1st wave.
✔️ The 5th wave rises 161.8% of the (0-3) length, measured from the end of the 4th wave. (It should be shorter than 261.8%.)
✔️ The 5th wave is longer than the shorter of 100% of the (0-3) length and 161.8% of the 3rd wave.
Since this wave satisfies all the above conditions, it is highly likely to be a Double Extended Impulse Wave with an extended 5th wave.
—
✔️BTCUSDT.P / BINANCE / 8H
This chart represents the external Fibonacci ratios of the extended impulse wave.
(For an impulse wave with an extended 5th wave, the external ratios are considered more reliable than the internal ratios.)
The characteristics of the external Fibonacci ratios for an extended 5th wave in an impulse wave are as follows:
(Satisfied: ✔️ / Not Satisfied: ✖️)
✔️ The length of the 5th wave, measured from the end of the 3rd wave, forms at 100%, 161.8%, or 261.8% of the (0-3) length.
Since this wave satisfies all the conditions, it is highly likely to be a "Double Extended Impulse Wave" with an extended 5th wave.
(The author also considers the external ratios to be highly reliable.)
—
✔️BTCUSDT.P / BINANCE / 8H
This chart includes the fourth piece of evidence mentioned earlier (Reference: 4️⃣).
One of the most essential concepts in "Elliott Wave Theory" is "The Rule of Alternation."
This principle is foundational to understanding market movements and is critical to the rules governing wave progression. Without it, Elliott Wave Theory would lose much of its practical value.
"The Rule of Alternation" is most clearly demonstrated in the period of corrective waves.
In the chart provided above, you’ll notice a comparison between the length of the 2nd wave and the 4th wave.
Typically, before an extended wave appears, the market tends to undergo a longer or deeper correction. In this case, the 4th wave is noticeably longer than the 2nd wave, which satisfies this condition.
This observation significantly increases the reliability of the wave pattern.
—
✔️BTCUSDT.P / BINANCE / 1D
Now, let's discuss the potential future direction.
If the low point of the 5th wave within the extended impulse wave breaks, it is likely that this impulse wave marks the final wave of a larger wave pattern.
In simpler terms, the 5-wave extended impulse wave we've discussed so far may represent the last wave of the current upward trend.
To put it even more clearly, if the price falls below the $50,922.5 level, there is a high probability that the market has transitioned into a downtrend.
Please refer to the following chart for further details.
—
✔️BTCUSDT.P / BINANCE / 1D
Based on the assumption that the market has transitioned into a downtrend, I’ve constructed the following scenario.
It appears that a Corrective Wave (Flat) has already occurred, and the market is currently experiencing a correction in response to this wave (indicated by the red dotted line).
According to this scenario, even if the price experiences an upward movement, it is likely to be a technical rebound within the broader context of a continuing downtrend.
—
Conclusion
Today, we applied the Elliott Wave Theory to the actual Bitcoin chart to analyze the market.
I made every effort to maintain an objective perspective.
I am aware that many traders and investors are anticipating a continued upward trend. However, my intent in presenting a bearish scenario was not to gain attention, but rather to analyze the market as objectively as possible.
It’s important to approach the market rationally, rather than simply calling for a rise without substantial evidence.
I encourage you all to remain wise traders and investors who do not succumb to 'FOMO' (Fear of Missing Out) and always maintain an objective view of the market.
Thank you for taking the time to read this post.
If you found this analysis helpful, I would greatly appreciate it if you could give it a "boost." Should there be significant interest in this post, I'll consider creating follow-up analyses.
Falling Knife stocks-How to identify them?I have discussed in previous post about what exactly falling knife stock is with a case study.
The next question would be how would an investor know that stock is a part of falling knife category?
To identify such stocks, I feel you should know about 2 concepts/indicators which are Moving averages and Fibonacci retracement. I will try to make you understand these concepts and also the levels where averaging/investing can be started.
1. Fibonacci(Fib) is a mathematical concept which governs the entire universe, even our stock markets. I can't explain the entire scientific concept here so just sticking to stock market.
Fib retracements help investors identify support and resistance for stock. There are 2 golden ratios which every investor must know, 38.2%(0.382) and 61.8%(0.618).
When a stock is in uptrend, 38.2% is the level where most stocks retrace upto. 61.8% is considered as last ray of hope for bounce in retracement. Any stock which has fallen below 61.8% is considered weak.
2. Moving averages(MA) are indicators which are continuously changing with moving stock market. These are an average of prices over a time period, hence Time frame is important.
There are many types of moving average, we use mostly simple and exponential.
When I say 20 Day EMA, it is Exponential average of 20 days of closing price of stock or when I say 200 week SMA, it is simple average of 200 weeks closing price.
Exponential is more used than Simple moving average which has scientific reason behind it so if you are curious, you can search for it.
200 Week moving average is considered as last ray of hope for investment. A fall below 200 Week moving average or 50 Month EMA indicates strong bearishness.
3. I have seen stocks reach from top to bottom and top again. Tata motors, HDFCAMC being few famous examples. Even, Most of real estate, PSU banks stocks are reversing. So, equity is beautiful, wild and highly unpredictable. However, A stuck investor should wait for monthly closing above 61.8% to start averaging in such stocks. Also, a closing above 200 Week EMA will slightly indicate return of bullishness and that's where reversal traders should think of investing
I feel this much knowledge is enough for now. If you have got some enlightenment from above information, lets apply this knowledge on one stock where I know many many investors are stuck, Rajesh Exports.
How do I know? I saw the shareholding pattern and that's where I was shocked to see the number of shareholders increase from 45000 odd to over 2 lakhs in the past 9 months!
Starting with fundamentals, Rajesh Exports Ltd is 4 decade old manufacturer of Gold and Gold Products available at a PE of around 9 and sales growth of 20% in last 3 years. All the ratios feel nice to me except the operating margin which is below 2% consistently which has led to drop in EPS which is major concern in the stock.
Technically, stock had a 52 week high of 1030 in Feb 2023 and it is now available at 360 odd which is more than 60% wealth destroyed. And as I said, the number of shareholders have grown 5x in the same time. (Note that FII, DII holding has reduced in same period).
If i see now from a non-investors perspective(psychology explains that investor can never see the bearishness), the stock has formed a beautiful double top and broken its neckline which was 61.8% of fib retracement all ready for a further fall and I see no support till 270-300 zone(sorry investors). It is also below 200 week moving average-red wavy line(if you check monthly chart, it is below 200 month moving average as well). A perfect example of Falling knife.
What next? If I were an investor, My last SL would have been 525 which is 50% retracement. Since, the stock is below 61.8% retracement , there is no chance of averaging at this moment. Hence, I feel investors should wait & watch until stock moves above 440 before averaging/entering. Don't jump in it. Wait for a big bullish monthly candle before averaging.
Also....
As promised,, I am sharing you names of stock which i have identified to be part of this unloved category. As an homework, do check fundamentals and reversal levels based on what we have discussed above.
The stocks are GRINFRA, TCNSClothing, Metropolis, Luxindustries, Polyplex, HLEGlasscoat, Deltacorp, Barbequenation.
If you are a curious investor, even you can find such stocks and do let me know in the comments below.
I would like to discuss any doubts regarding the concepts, idea or anything related to stock market so feel free to comment.
Keep investing, keep minting. India has a very big future ahead so these are the best few years to invest in India.Be a smart investor because it is important that you choose the right stock to meet your financial goals.
Trading journal 🥲 20 trades posted for you guys
4 of them got SL❌ hit without reaching TP 1✅.
That's not the end of my trading 😅 ,no one is 100% accurate in any field.
80% win rate is satisfied for me to be a profitable trader as we can see some of them never touched SL and still keeps growing which is also a very good thing about this journey.
Always trust your plans 👍 ,
Psychology tip:-Don't let FOMO interact your mind or trading plan. Sl tp entry always remain same..never change them once u have set. Just forget after getting into the trade..either hit tp or sl.. don't bring sl to more down and increase your losses or tp to more up to increase your risk of hitting it.
Viewing Deep Preview on Fibonaccisjust now
Hey Everyone,
Today we are again with a lot of information and a bunch of topics, so consider following us for regular ideas and market updates
Let's go Strictly into the idea
So In the last idea we covered an overview but now lets cover a detailed view and even learn about Fibonacci Extensions, Fibonacci Number and Lines and more and more.
What Are Fibonacci Retracement Levels ?
Fibonacci retracement levels are horizontal lines that indicating where support and resistance can take place . Each level is having their own percentage. The Fibonacci retracement levels are 78.6% , 61.8% , 23.6% and 38.2% . But the most working levels of a Fibonacci are 38.2%, 61.8% and 78.6% . The indicator is very useful because it can be drawn easily and it can tell you many thing such as support and resistance . It can be drawn between high and low where the lines form is your support and resistances .
What Are Fibonacci Extensions ?
Fibonacci extensions is a tool that can be used to target Profit or approximate how far a price should travel after a pullback ends . Extension levels are also the areas where the price may reverse
These levels are based on Fibonacci ratios . Common Fibonacci extension levels are 261.8% , 200% ,161.8% , 100% , and 61.8% .
What Is the Fibonacci Number and Lines ?
The Fibonacci Numbers and Lines the sequence of numbers , is a slowly increasing series where every number is the equal to sum of the preceding two numbers .
We will meet you very soon so consider following you can unfollow us any time
Thanks for reading it and giving it your time
Bye 😁
'SWING' your losses into profits with 'SWING' trading strategiesIn prior posts, we have covered some great teachings about the market and,
in this post, we will elaborately cover the swing trading strategies. Let's start !!
->Definition of swing trading -: Swing trading is generally referred to as a trade carried out for a short time. Swing traders do not wait
till the price action opposes their direction, they are known for their prior moves.
They are good at identifying the shifts in market trends with the help of various techniques which are explained throughout this idea.
Swing trading strategies include the use of Fibonacci, Bollinger Bands, Channel Trading, Moving Average, MACD crossover, and better
understanding of chart patterns like Head & Shoulder, Flag, and Triangle Patterns.
We will discuss chart patterns, later on, now let's focus on the indicator strategies.
- >Swing trading strategies -:
->Fibonacci Retracement: The stock price tends to retrace, and swing traders use this retracement as an opportunity to enter a trend.
The retracement levels could be identified using Fibonacci Retracement, all you need is to identify the prior trend and if the price retraces to the 0.618 level and
again resumes the trend jump on it and ride the position till it reaches 0.236 level.
->Bollinger Bands : Most probably, the stock price tries to move in the Bollinger band, which is used by swing traders to initiate and terminate their position.
Firstly you need to identify the major trend, let's suppose it's bearish than when the price reaches the upper bound and there is a formation of a bearish candle
you could initiate a short position also when a bearish candle is formed at the median, there also you can initiate a short position.
->Channel Trading: Sometimes, stock price trades in a channel now this channel is used by swing traders i.e. when the trend is bullish they try to take long
position at the lower range of channel and book partial profits on median and wait for the price to reach the upper end.
->Moving Average: Here traders identify the major trend and take position according to it, with help of crossovers they generally prefer 10DEMA crosses 20DEMA.
->MACD : This is a simple strategy where the trades are initiated when there is MACD crossover but the cross should correlate with the trend.
My Observation-: These strategies could be more accurate if used to trade with the trend, i.e. if the stock is in an uptrend only take positions for a positive signal and just avoid negative signals.
Another basic strategy is to take a position when a script moves above the swing high or below the swing low, here the only thing to ponder is to manage your risk. Don't take over positions understand your risk appetite then take positions.
You Might Have Heard A Lot About This Hey Everyone,
Today we are again with a lot of information and a bunch of topics, so consider following us for regular ideas and market updates
Let's go Strictly into the idea
So What is a Fib Retracement ?
Now You might think it is just making lines and deciding on support or resistance but it's way too far, as shown in the thumbnail " The Major Levels " it means the levels that can be a support or resistance and can be found easily as shown.
So Now we have learned What is Fibonacci Retracement, Now Let's Know How to use It ?
To use fib retracememts we need to first find a low and a high level and then set 1.000 and 0 and then just seek at The Major Levels to Trade.
This was just an overview if you want a more detailed idea in which we will discuss Fibonacci Extensions , Fibonacci Number and Lines tell me in the comments and i will do for sure
Thanks
Bye - Bye
What is Fibonacci extension?Hey everyone! 👋
Last time we explained some of the basics to know when it comes to understanding the Fibonacci retracement tool. If you haven’t read that post, be sure to check it out here:
In this post, we are going to look at the Fibonacci extension along with a few exhibits that may help you solidify your understanding of this unique trading tool.
Please remember this is an educational post to help everyone better understand investing and trading tools. In no way are we trying to promote a particular style of trading!
Table of Contents:
1. What are Fibonacci extension levels?
2. What is the significance of extension levels?
3. How to find extension levels?
4. Difference between the Fibonacci retracement and Fibonacci extension
Without further ado, let’s jump in!
What are Fibonacci extension levels?
A Fibonacci extension is a tool that can be used to find price targets or estimate how far a price may move after the retracement/pullback is over.
Extension levels are also possible areas of interest where the price may stall or reverse.
It can be used to find projected areas of support or resistance when the price is moving into an area where other methods of finding support or resistance are not applicable or evident.
Fibonacci extension levels can be calculated to give the trader ideas on profit targets.
Significance of Fibonacci extension levels
Different traders use this tool differently but the most common usage is as follows:
Fibonacci extensions can be used for any timeframe and in any market- stocks, commodities, cryptocurrencies, etc.
Fibonacci extension levels indicate a price area that will be significant for the stock after the pullback/correction is over.
Extension levels can be drawn on different price waves over time. When levels from these different waves converge at one price, that could be a very important area.
For example , A stock may be in an uptrend. After a move up, it retraces to the 61.8% level. Then, it starts to go up again. In this case, the extension tool can be used to find the optimal targets after the price moves above the swing high level (100% level).
How to find Fibonacci extension levels?
In order to find the Fibonacci extension levels, you have to find the recent significant swing high and swing low and then plot the Fibonacci extension accordingly.
For uptrend: First, select the swing low and then the swing high. Then go to the Fibonacci settings and select reverse.
For downtrend: First, select the swing high and then the swing low. Then go to the Fibonacci settings and select reverse.
Exhibit: Fibonacci extension in an uptrend
Exhibit: Fibonacci extension in a downtrend
Difference Between Fibonacci Retracements and Fibonacci Extensions
Fibonacci retracements provide levels for a pullback whereas Fibonacci extensions provide levels in the direction of the existing trend.
For instance, a stock goes from 50 to 100 and then falls back to 75. The move from 100 to 75 is a retracement. If the price starts rallying again and goes to 150, that is an extension because the price moved past the previous swing high which is 100 in this case.
Conclusion:
Adding Fibonacci analysis with other common methods of technical analysis can be useful for adding confluence to a trade.
Thanks for reading! Hope this was helpful!
See you all next week. 🙂
– Team TradingView
Feel free to check us out on Twitter and Instagram for more awesome content! 💘
What is Fibonacci retracement?If you have been in the market for some time, you may have heard of “Fibonacci retracements” . Today we are going to share an informative write-up along with a few exhibits that may help you solidify your understanding of this concept.
Table of Contents:
1. What are Fibonacci levels?
2. What is the significance of retracement levels?
3. How to find retracement levels?
4. How to use the retracement levels?
Without further ado, let’s jump in!
What are Fibonacci Retracement levels?
The retracement levels are horizontal lines that indicate areas where the price could stall or reverse.
These horizontal levels can act as potential support or resistance levels.
They are based on Fibonacci numbers. Each level is associated with a percentage which means how much of a prior move the price has retraced.
The retracement levels are 23.6%, 38.2%, 61.8%, and 78.6%.
While 50% is not a pure Fibonacci ratio, it is still used as a support and resistance. This is because people regard it as an important level.
The price won’t always bounce from these levels. They should be looked at as areas of interest. Hence, the Fibonacci retracement should be used as a confirmation tool.
Significance of Fibonacci Retracement levels
Different traders use this tool differently but the most common usage is as follows:
Place entry orders
Determine stop-loss levels
Set price targets
For example, A stock may be in an uptrend. After a move up, it retraces to the 61.8% level. Then, it starts to go up again. Since the bounce occurred at a retracement level during an uptrend, long positions can be initiated with an optimal stop loss.
Finding Fibonacci Retracement levels
In order to find the retracement levels, you have to identify the recent significant swing high and swing low and then plot the Fibonacci accordingly.
For uptrend: First, select the swing low and then the swing high.
For downtrend: First, select the swing high and then the swing low.
Exhibit: Fibonacci retracement in an uptrend
Exhibit: Fibonacci retracement in a downtrend
How to use the retracement levels?
If the price is approaching a Fibonacci level, you should look out for the following things at the point of interaction or in the vicinity of the level.
Reversal candlestick patterns
Rising volumes
Moving average
RSI divergence
Previous support/resistance level
Conclusion:
Adding Fibonacci analysis with other common methods of technical analysis can be useful for adding confluence to a trade.
Thanks for reading! Hope this was helpful!
See you all next week. 🙂
– Team TradingView
Feel free to check us out on Twitter and Instagram for more awesome content! 💘
Can you predict such falls? Fibonacci Retracements - (bad audio)Market fall may have taken few by surprise, but followers of price action techniques should have this scenario in their plan. Trend analysis (or Elliot wave analysis) along with Fib Retracements could be of enormous help if used in tandem with price action. They at least give you minimum target and levels, so that you are able to ride the trend and also do not make impulsive entry decisions.
(Disclaimer: the audio quality is really bad. Somehow the system is not allowing external mic and using internal mic which is capturing lot of noise. Tried typical methods but not working. If you have solution let me know)
Asian paints case study: using Elliott wave & price action.
Asian paints had corrected more than 16% in just a month .
After 101 days, the price is back to the strong support zone.
Price has made a kangaroo tail/hammer candlestick pattern on the support zone. 200EMA is also near to price.
Wave principle is also giving a similar explanation.
There are three confirmations to find the ending point of wave four.
1. Price can take 61.8% retracement of the 3rd wave at 2782 , which is also a monthly support level.
2. Wave 4 can end nearby to support area.
3. sub-wave C of wave four is 161.8% of wave A at 2845 .
If the price enters the parallel channel, we will get a candlestick pattern and support zone's demand pressure.
200 EMA is also supporting this statement, which is close to the price. Or we have to wait for the monthly support level where the price is getting support, but entry is not possible without any reversal signal.
If the price isn't giving any reversal signal, the price will fall continuously.
Violation: Wave 4 can never touch wave 1. (at 2692)
I will upload an intraday chart with entry and targets the Asian paints soon.
Part 3: Elliott Wave Principle - Double three correction guideIt looks like mother Sumi has completed the 4th wave correction, and the ending point of the corrective wave (4) is the starting point of wave (5).
Wave (4) is occurring in double three corrections.
A "double three" consists of two corrective patterns, the first labeled W, and the second label Y, separated by a corrective pattern
on the opposite side, which is labeled X.
Wave formations:
Waves W is a zigzag correction pattern.
Wave Y triangle.
Wave X could form any correction pattern.
Wave X is smaller than wave W & Y.
Rules and objectives:
1. Double three is a corrective structure that includes more than one type of corrective pattern.
2. It consists of three waves, which are marked W-X-Y.
3. A triangle may occur only as wave Y in a double three.
4. In most cases, double threes are not deep corrections.
5. wave Y usually ends at 100% – 161.8% Fibonacci extension relative to wave W.
6. Wave Y should not go below the 161.8% Extension of Wave W. It shows that the corrective trend is strong.
7. There never appears to be more than one triangle.
What are the double threes?
Price picks up momentum when it starts an impulsive wave.
After accomplishing the impulsive wave, it corrects the previous move by a three-wave pattern.
These three waves were not enough to complete correction because of the high momentum & directional power of an impulsive wave.
Price creates another three-wave move to complete the correction by merging through intermediate wave X.
Let me make it easy by explaining and structuring examples.
Double three Structure:
Real Example:
CLASSIC ELLIOT WAVE PATTERN AND TRADE SETUP LOGICPost covid IDFC FIRST has been moving up in an impulsive manner.Impulsive move advance's price in 5 waves of which 1,3 and 5 are in the direction of primary trend and 2 and 4 are counter trending.
Elliot wave Patterns discussed in this chart and it's rules.
*Elliot wave impulse pattern and rules:
#Impulse pattern
1)Wave 2 doesnt retrace wave 1 completely.
2)Wave 3 cannot be shortest of wave 1,3,and 5
3)Wave 4 should not enter wave 1 price action zone or wave 2(incase wave 2 being an running flat correction ).
#leading diagonal
Leading Diagonal:It is variation of an impulse pattern where in we see 5 wave advance in the direction of primary trend but rule 3 of impulse pattern is not followed by wave 4 and wave 4 enter's wave 1 zone.Rest of the impulse rules remains same.It can have internal structure 5-3-5-3-5 or 3-3-3-3-3.
#Extention
Extention pattern is nothing but any motive wave sub-dividing itself in 5 sub-waves of smaller degree and extending either of the motive wave by at least 161%,in this case we can see this happening in wave 3.(a classic pattern)
*Elliot wave Corrective pattern and rules:
#Flat:
1)It is a 3 wave (A-B-C) pattern,in a counter trending direction.
2)It has internal structure of 3-3-5.
There are many variation of FLAT correction depending upon wave B and wave C's length.One of which is Flat with truncated C which is seen in this chart and discussed below.
Truncated Flat:It is a variation of elliot wave corrective pattern called a FLAT correction which has 3 sub-waves(A-B-C) of almost equal length in the opposite direction of primary trend having internal structure of 3-3-5.In truncated wave C FLAT,sub-wave C doesnt retrace sub-wave A entirely by 100%,indicating strength in primary trend.
#Triangle:
Triangle is corrective pattern with 5 leg's in the form of A,B,C,D,E.Triangles are generally seen in wave 4.It has internal structure of 3-3-3-3-3.There are 3 main variation of triangle pattern ,regular triangle,expanding triangle or neutral triangle.Over here we are seeing either expanding or a neutral triangle.But i am only specifying rules of neutral triangle over here reason for which is discussed in detail below in analysis part.
Neutral Triangle:
Here wave C is longest among wave A,C and E and hence instead of A-C we connect C-E trendline in triangle formation.Triangle's are tricky pattern to trade.In classic technical analysis a head and shoulder pattern top or bottom represents neutral triangle.
Following patterns are observed in this chart:
Wave-1)Leading Diagonal-we had 5 sub-wave where in wave 4 was over-lapping wave 2.
Wave-2 ) ABC FLAT with Truncated C,meaning wave C didn't achieved it's regular flat 100% wave A extention target,indicating strong momentum in wave 3,also wave 1 was only retraced by 38% which again indicates wave 3 will be extended.
Wave-3)Classic 261.8% extention of wave-1,nothing much to explain as it's a text book elliot pattern where in momentum is strongest.
Wave-4)Triangle(either neutral or expanding),again a typical elliot 4th wave pattern where we see prices correctiong in 5 leg's A,B,C,D,E each internally sub-dividing in 3 waves giving entire structure 3-3-3-3-3 internal structure.
Analysis:As of now we are in wave 4 in primary degree,making either of the above mentioned triangle.So far we have already seen 4 leg's of this triangle and wave E is going on.In this wave E we are done with wave A and B and currently wave C is going on.I am considering this wave E as a regular flat.
Reason behind wave -4 to end near 44 levels.
1)100% wave A extention target of wave C for regular flat correction in wave E of triangle is coming @ 44. 05 INR
2)We also have 61.8% retracement of entire primary wave 3 coming @ 44.95
3)Add to it we also have intermediate wave 4 low of primary wave 3 @ 43.50 odd levels
4)lastly we have raising trend-line connecting triangle's wave C low's and wave E's sub wave B(not shown) coming at 45 odd levels.
This are sufficient evidence for priamry wave-4 to end near 43-45 levels.
Trade setup
1)For Conservative trader:
One can go long once the B-D trend-line of triangle get's broken which is coming at 50 odd levels with a initial stop-loss of wave 4 low's and expect wave 5 to be of equal length of wave 1 giving us price target of 61.Risk reward would be 1:2 expecting wave 4 ending @ 44-45 levels.
2)For Aggressive trader:
For some one who is aggressive can take long's once we get reversal candle in our target zone of 43-45 on daily chart meaning a morning star , hammer , bullish peircing, bullish engulfing candle sort of candle.Stop-loss would be same wave 4 low,however in this case we would be showing commitment before market commits itself but then one does get better risk-reward by entering early.Here also target will remain same of 61 but risk reward will be better compare to 1st scenario.
One can even add momentum indicator and a short-term moving average for further confirmation in order to take entry .
PS:Analysis shows classic text book elliot wave pattern and it's characteristics which is very rare to find on practical charts,hopefully this post help's someone who is learning elliot wave theory.We are also seeing alternation between wave 2 and wave 4 interms of price,pattern,time and retracement which is again a classic impulse characteristic.
Disclaimer:Analysis provided here is for educational purpose,trades should not be taken solely on its basis
Bitcoin giving initial positive indicatorBITSTAMP:BTCUSD
COINBASE:BTCUSD
BINANCE:BTCUSDT
This is in continuation of previous posting "Bitcoin at crucial support point".
Breakout of RSI trendline is initial indicator of Bitcoin moving back in positive territory is seen at A on chart.
It now require confirmation by crossing 38.2% Fibonacci level and the price trendline as marked as B & C respectively on chart.
- Rajesh Ramchandani
Scenario - 1 (Ending Diagonal) Trade Setup technique(live)...Before getting started for high opportunity Trade Setup. Let's understand the about Diagonal.
What is exactly Diagonal: It is a five-wave overlapping structure, wherein each wave subdivides into three smaller waves. It is typically an ending or terminating wave pattern and is found in the fifth wave position on an impulse wave and the wave C position of A-B-C formations. A Diagonal Triangle is normally contained by two converging trend-lines. A Diagonal Triangle is normally contained by two converging
trend lines.
Rules of Diagonal:
A Diagonal Triangle is made up of five waves.
Each wave within a Diagonal Triangle must subdivide into 3 waves.
Wave 3 cannot be the shortest impulse wave of waves 1, 3 and 5.
Diagonal Triangles can only occur in the fifth wave position of impulse waves and the wave C position of A-B-C formations.
Diagonal Triangles are found only at the termination points of larger wave patterns.
This is earlier considered Ending-Diagonal for multiple reasons. One of the reasons is, we will get higher reward than risk in short side. Let's assume that wave B of (iii) of diagonal end 17269 nearby and then target is has high reward for wave C of (iii)wave.
Calculation:
17490-17269 = Risk 221 points
Reward 595 points = 17269-16674
Aggressive trader or a trade who are able to risk can sell 17190-17260 is best levels but safe traders can enter 17270 on side of short selling. I will also update follow up time to time on this post.
Fibonacci Trading Strategy : Beginner's to Advanced GuideWhy Fibonacci Tools?
Fibonacci tools can help traders to determine upcoming support and resistance areas.
Unlike other indicator which works on historical data and mathematical calculation considered to be as Lagging Indicator.
For Example: MACD, Stoch RSI, Bollinger Band etc.
Where as FIBONACCI tools does not come from any formula and historical data, it is predictive in nature and helps to determine potential support and resistance before price gets there.
That’s why Fibonacci tools considered to be leading Oscillator.
I will not go in details how this numbers are shown up, you will get theory part online easily. I think our main objective to learn how to use in our trading.
So, let’s get Started.
MARKET TRENDS
The key to successful trading with Fibonacci is to trade in the direction of the overall trend.
As we all know that there are 3 Market trends.
1.UpTrend.
2.DownTrend.
3.Sideways.
If you ask me what is current BANK NIFTY Trend, I will say at what Time Frame. Why?
Because at 1 Week HIGHER TIME Frame shows Uptrend Market and 1 Hour time frame shown Down Trend market.
You can also use Moving Average (EMA 50), to distinguish trend.
Price> 50 EMA Uptrend and Vice versa.
Once you Identified Trend of Market, we are good to go to next step.
Higher Time Frame:
Lower Time Frame:
RETRACMENT LEVELS
The most popular retracement levels are (23.6%, 38.2%, 50%, 61.8%, 78.6%).
Fibonacci retracement levels are mainly used to determine support and resistance levels.
When market retrace from 23.6 % and 38.2% considered to be as shallow pullback and leads to highly trending market.
Whereas 50%, 61.8% and 78.6 % considered as Deep Pullback and leads to weak trend.
61.8% is very important level because of Golden Ratio and act as psychological number where Profit booking and Reversal is expected.
How to Draw?
Now we all know how to identify Trend and what are the important retracement levels.
Now we will look how to draw Fibonacci Retracement.
“ALT + F” or “Ctrl + K” and type Fib then Select it.
Now select Swing High and Swing Low from the chart.
Note: I am considering SH and SL as a LEG.
You will be having doubt which Leg to Select, answer is simple you can select as many legs and find Confluences between Leg. Which will act as great Support and Resistance.
ENTRY :
Ok, So I will be talking about entry based on your personality.
1. Aggressive Trade
As soon as market touches 61.8 % levels, you enter and I think this is risky way to enter but your reward will be higher.
2. Conservative Trade
You will be waiting for Confirmation and place your order and this ideally best way to enter but reward is lower.
And I will dig deeper into confirmation for the trade.
Confirmation
1. Using Indicator: Moving average Crossover(9EMA,25EMA), MACD, RSI, VWAP etc.
2. Using Candle Stick: Pin Bar, Engulfing etc.
3. Using Support and Resistance: Check for S/R area.
4. Using Trend Line
I Think you get an idea what confirmation you can use, if you are indicator trader use any one of the indicators mentioned above and if you are Price action Trader you can use Trend Line, Support and Resistance, Candle Stick etc.
STOP LOSS
This is a Tricky Part as there are many ways you can use Stop Loss but many of them can Stop Out from volatility.
My Personal Favourite is 1 ATR from retracement level. So, you are considering Average Price movement and slightly Below that level to avoid market Fluctuation.
For Example: 1 ATR Value is 25 and your Stop loss will be 28.
Other Stop Loss Technique:
1. Previous Candle Low.
2. Support/ Resistance.
EXIT:
If you’re Indicator Trader you can use
1. Moving Average Crossover (9EMA, 25 EMA) when 9 crossing 25 you exit.
2. MACD Crossover. etc.
But I will recommend to use 3 PART Method. To Exit from your trade.
We will be using another FIBONACCI Tools which is FIBONACCI EXPANSION.
I will suggest to modify setting and chose only (0, 0.168, 1, 1.618) and don’t ask me why only this number, these are the widely used number for target and works in every time frame.
Using this tool is slightly different then Fibonacci retracement where we have to choose two point (Swing High and Swing Low).
In FIB EXPANSION we need 3 Point (Swing High, Swing Low, Retracement).
It will Project 3 Target (0.168, 1, 1.618).
So, our Strategy will off load 1/3rd of our qty at 0.168 level and trail stop loss to our entry point and wait for 2nd target and off load 2/3rd and last qty at 1.618 Level.
In this way we will booking our profit and waiting for remaining qty to achieve remaining target.
CONCLUSION
Every Strategy is 1/3rd part of Trading Plan which means RISK Management and Psychological plays crucial role to master trading. Which many of the traders neglect and suffer losses if you guys interested in RISK MANAGEMENT and PSYCHLOGICAL Lessons.
Drop Down Comment Below, if you want more Strategy like these and Stock ideas don’t forget to follow me on Trading View.
Peace Out.
never seen picture perfect tool with absolute dot (16983.2)with picture perfect fib extension will nifty reverse
have we made new bottom of 16800 ?
never seen picture perfect tool with absolute dot (16983.2)with picture perfect fib extension will nifty reverse
have we made new bottom of 16800 ?
never seen picture perfect tool with absolute dot (16983.2)with picture perfect fib extension will nifty reverse
have we made new bottom of 16800 ?
educational purpose - can buy cipla above 1005if cipla sustains for good time with decent value above 1005, it can be good buy
