One can count the recent rally we have as 5 waves complete but I think that there is a possibility of another subwave to finish off the complete 5 waves to form either a 1st wave of 5 or a C wave that Bearish EWrs are calling for. The Daily SPX is still chuggin' along to the upside and has not indicated a turn but we dont see on the daily chart we can see on the 60min chart that allows for a turn down. Corrective or not the clue lies on the impulsiveness of the move and whether the indicators are able to manipulate the daily trend to change aswell.
thanks for teaching me about the daily (hourly) stocs. Ive never focused like that. Its even better than RSI. But when I look today,it looks 50/50 on it turning down on the hourly SPx or spy chart. When I look at IWM today the hourly turned down then reversed back up. So hard to say.So what would your subwave level go to then back up to complete your 5 waves. I dont know anything about EWrs, so that is why I ask trying to see what you see. What concerns me the most is how the dollar is just burning (going down). I was hoping it would make a positive divergence today, but i couldn find one. thanks.
ReplyDeleteThis is going to sound complicated but I will try to explain it in a simpler way.
ReplyDeleteLets take IWM as an example...
Monthly - Up overbought
Weekly - DOWN out overbought
Daily Stoch - UP above oversold
60Min - DOWN Out overbought
15Min - UP Near overbought
5Min - DOWN overbought
The above is a summary of stochastics trend. You need to find the one time frame you want to use as your "MAIN TREND". I will use the Daily as my main trend.
Since Daily is UP our trend is up until it turns down. Next move is to only enter trends that are UP. Therefore we must look at one time frame lower which is the 60min. (Down). So this means we should not play the upside until it crosses up again. So it might come down for a few days or hours or it might turn up tomorrow morning and put in a divergence.
The reason of playing the upside is your risk is less for any down move. So lets say you want to hold the position overnight. chances are that a move in the morning could be on the upside rather than downside.
Look back at all the trends of the 60min since the turn up on the daily and you will see the counter trend didnt last long.. and big moves were UP UP UP (Ie. Oct 15 bottom we had an hour consolidation and gapped up on the morning of Oct 16, and then up again by morning of Oct 17th.
Same can be said about the daily if you look at the weekly trend.
Lets look weekly up move during June - mid July.
Looking at the daily during that time we see 3 corrections but the larger move was to the upside.
Now your question about the 60min IWM. My thoughts are there are 2 options...
Option 1 - Higher high in the morning to make a divergence in the stoch.
Option 2 - Head lower
Analysis: 60min stoch down trending look at next time frame lower
15min (UP). By looking at that we now can see that there is a chance 15min will push the 60min up. But how can we see if 15min will push up or turn down. So we look at the 5min chart... and it says (DOWN but still in overbought).. Next 1min - (last time chart where we cant go any lower) and it says up
Conclusion:
Trend is UP Risk of shorting Greater than going long. Any overnight position is more favourable for upside. Since 60min is near the top we would like to see it top out with the 15min and turn down the same time then buy it back if the dauily is still up trending.
let me know if its understandable..
Every time-frame will affect the other. In this case 1min will push 5min that will push the 15min up and will push the 60up until it cant push anymore.. then 60 will turn down again. This is where you get out and wait for an entrance when its at oversold or near the bottom and daily still wanting to move higher.
ReplyDeleteAs for positive divergence, no there was not any but your 15min. told you the move up has begun at 2pm. EW is not accurate. We can count waves as much as we can and be good at it but in the end there are 21 different patterns and your better off to pick buy or sell which is 50/50 (better odds). I use EW to tell me if the previous move is 5 or 3 because chances are better for it to make 3 waves after a 5 wave move and 5 waves after a 3 wave move. But you dont need to know EW to trade stocks well. Believe it or not.. you can use just the stoch alone if need be.
ReplyDeleteThank you so much for this information.I understand what your saying, I just need to analyze it with a chart now.
ReplyDeleteIm not wanting to short, im just trying to learn more. SO right now im looking at the stochs and they making lower high on hourly while spy making higher high. So is that where you would consider it a possible divergence. Im then applying this to tlt where its making a lower price while the hourly is still crossed over but the stochs are higher...Granted tlt has a gap at 119.50 area or so. Im trying to see a divergence between two..
ReplyDeleteim assuming your are looking at iwm and its down on the 60min. so we need to see if it continues higher. Your 15min is down but has entered oversold range and could stay there for a while so your next entrance to the upside is if the 15min Crosses up and out of oversold range. But today its going down while your daily as your main trend is up. Only time to go short is if your daily finally curls down and crosses on the stoch.
ReplyDeleteAs for trying to find divergences, I would recommend that you analyse the tickers separately and do not look for divergence. Instead let them happen on thier own charts. If youd like to find divergences between charts (im assuming you are using stockcharts for charting). Try typing spy:iwm (this calculates the ratio between the two. You can find divergences between them that way and if you like you can flip them around iwm:spy.