We talk about radial termination today.
Figure one shows a Volatility Whip (VW) in deep pink after a wave structure ended to the downside.
The Lock Out Close Out point is at the end of the V leg.
The W leg does not taken out by more than 5 pips, so this is a failed attempt to the downside.
Figure two shows the new wave structure starting from the excess and after wave 3’s three-push rampage, the wave 5 single blow’s rebound is already a V leg. Since the structure was to the upside, the LOCO point would be on the bottom.
The starting point of Wave 1 is inside the V leg and is the first pull back of the W.
Figure three: Wave 2 gets picked up upon the penetration into the last V leg within 4.5 pips .
The market shifts gears, things start to happen faster.
LOCO gets placed on the top.
Wave 1 starts just from above the hourly close of the W leg.
Wave 2 is a 3-pip penetration into the V leg (red circle shows the fake out of the Hourly Maroon).
The Loco point just falls shy of the low made by Wave 3 to the downside, to the actual matching of the lows becomes a 4-pip fake out out the LOCO as well.
Figure 5: the ominous Institutional market move & the present.
Looking at this image the institutional move looks more like a market making move: they put in longs those who never in a million years wanted to be.
The wave structure ended just above the previous LOCO line and a new LOCO was printed. Fake outs galore. Having an open that would reach below 1.1153 would set up a back test of a now doubly wide LOCO pair of lines = Kiss GoodBye.
Now, what if they gap it up? There is some potential (5-15%) here to go crazy and milk more buying. A small gap up would change nothing on the picture. You would need to increase your tolerance beyond a 5-pip fake out of the V line for a bit, so I would only start hedging shorts gradually, and starting beyond 1.1181. Watch out for the increased spread at the open as well, for your ask line might be showing a break out 4-5 pips earlier.
To me, at the moment it looks like Wave 1 down was started with the back test of the overbought area, and there were more than Four Tops made above the Upper Guard rail (in green) which is the Bottom Rail of Bull Zone 1.
See you all in Acapulco!
(The fact that the time frame had to be blown up by the end shows that there is less liquidity up here for the market can only sustain shorter moves. The Market wants liquidity, the brokers want commission.)
Do remember the possibility of a continuation still, and be prepared for it.
Another 5 waves up would put price somewhere between 1.1266 and 1.1285. So, if price violates 1.1158 first, then comes back through it, surrender all hopes that the next wave structure would occur to the downside and ride it hedged (or overhedged) to the nearest check point.