Trading the Commuter Market

The first thing to say about this kind of a market (which is any market that is not embedded in the long term overbought / oversold) is that neither group has privileges over one another and the lead one may enjoy (i.e. due to a surprise loss of embedding) shall only last until the current move wears off.

By this, I mean that after wave 5 of Wave 5, the tide turns in a big way. And wave 5-s tend to be underperforming, which means that they merely match the terminal point of Wave 3, and often would fall short.

The implications would include the high probability of a reversal in Bull Zone 1 and Bear Zone 1. A range bound market would often be playing ping between the 30-minute LEMA and the 2H LEMA.

For the most part this is a calm and collected game where the parties (bulls & bears) have to wait for their turn.

The monkey wrench is when the strong handed bulls/bears override the privilege for the next move by taking over the tokens of the weak handed bulls/bears around the guard rail, and from 1x stretch they pull the band out to 3x stretch with their continuous buying/selling.

Figuring where you are at in the board game takes tools, such as plotting mowing averages, displacements and counting waves. Additional hints may arrive from the Energy Bands (arguably one of the best indicators ever invented by anyone), and from monitoring for volatility bracket breaches of the consolidation level as well as for RSI2 divergences.

As you will see, applying the knowledge you get here would make a world of difference in knowing what is happening: how far can the market go, when and where would it be turning around.

The following image shows you the hit of the Energy Bands, the back test of the high, the daily RSI2 divergence and the volatility bracket breach all in one picture.

Find my LEMA 30N indicator on this blog for the LEMAs, the guard rails and the purple haze displayed on a 30-minute time frame correctly.

Plot E-16, which is E-32 on the 30 minute. When in picture based on the Daily, 4H divergences and breaches, we are working off the 30-minute.

The following image shows a not very typical, but symmetrical wave structure down: both Wave 2 and Wave 4 hit the E-32. You can clearly see the whoop-bam-boogie peaks of Wave 4 on the RSI below, but to get the structure right, for Wave 2 you would have to zoom in to 15 min.

As an actuality, check out my the blog entry, “..in Acapulco”. Where I calculated the target using a fractal sequence. Look at the date of the post and the outcome as well.u

…Wave 2 down made – think Pivot, think fake out of 4H doji. A Wave 2 can also exceed 100% retracement of Wave 1, so factor in this possibility. This looks like a scare on the Volatility Whip.

What makes this move up a Wave 1? The fact that it managed to fake out Mr. Maroon. If you think about it, Wave 1 & 2 can draw a whip as well, but on a larger scale, which would mean an enormous bear trap.

…so this was the Monkey Wrench I just mentioned. Look up my entry about Trading Bear Zone 1 for further info about the rules that apply here, such as:

Sell after Whoop, Bam and Boogie finished making sandwiches in the kitchen.

Also, pay attention to the red tails at the end.

…the path of least resistance summed up in one picture