Nick’s Lessons #3

You need a market model to gauge market events, direction and strength.

LEMA 30 comes with 2×3 displacement lines of the mean.

1x Stretch is the Guard Rail

3x Stretch is Purple Haze

5x Stretch is the Icing

The market constantly provides you with information regarding for instance the health / stage of the rally.

For instance, yesterday’s events were a failure at the Icing, a dip below Purple Haze, a consolidation above Mr. Maroon, a break back above Purple Haze, which resulted in a new leg up, attacking the other side of the purple-white channel.

The current failure to reach the top of the channel talks of waning momentum, and if we just saw the trigger high, the likelihood would be a mean reversion to where the Green River was at that given moment.

There is a bit more to say about the preceeding consolidation, that came out of the Wave 4’s ABC correction (3 Full lambda legs).

Concentrate on the squashed RSI2 zigzags below. They don’t quite get to the top, and overall are situated in the upper half. This normally preps a top, and the beat would be a sell. Not this time, refer to the wave count.

V break was bent over backwards.

What tells you about the rally being at its final stage is the lack of conventional entry points. Other than this “break away”, there were no opportunities at E32 to get in on a shallow pull back. There was an extra deep pullback, the end of the ABC that was the best spot, and it worked that time. I don’t think the next extra deep pullback would do the same.

In closing consider the 16/26/36 beat calculation between the end of Wave 3 and the likely end of Wave 5.

1.12129+36 pips = 1.12489

…what do you know, price got consolidated & the game was on again…

In this valley the price reached full charge

plus there was a continuation divergence visible even from the 1H