I can’t stand when people use the expression “price action”. Partly because I first heard it from Anton Kreil, for sure, and I hate scammers and everything he does (exploiting traders for life taking most of their profits beyond the expensive “tuition”) – the ultimate capitalist (& arrogant alcoholic pig) – a bit like HedgEye’s McCollough. (So how would I define scamming in the light of this? Misleading people and causing them material harm out of bad will – the key here being maliciousness: they know that they don’t know, but they take your money pretending to be someone they aren’t.)
But we have nothing in common if you think that the market is ever doing some random shit.
The market is the most conscientious thing out there and do not confuse you not getting the sequence of the events right with price making unconscious movements. That’s not to say that there may not be low liquidity periods waiting on an announcement, but news do not change the already existing positioning and they are not going to change a Wave 3 down to a Wave 1 up for instance no matter what the context would be. The big players cannot simply ditch their futures contracts without somebody wanting to buy them (see zero sum game).
Douglas Adams’s Hitchhiker’s Guide to the Galaxy was a trilogy in five parts.
The first image shows a 3-wave “zigzag” in red that are 3 waves long that are made up of 5 distinguishable legs – with overlaps.
The second, white zigzag is followed by a VW or Volatility Whip, which is like a coda in music, but here, again a purposeful thing: you have the 5 legs and the volatility gets worked up for the next move up.
How do I read the current move up then? A Wave 3 up with price currently being at the end of wave 1 of Wave 3. This move up does not at all look corrective with the squirt at Mr. Maroon and the extended stay above the mean, ignore Captain America. There is a slight divergence between the magenta block and the green print – but alternatively – slightly less odds on this one – with continued buying could wipe out the divergence and call the pull back to the mean wave 2 of Wave 3 placing the price into wave 3 of Wave 3 up.
This much would be enough to digest for a lesson.