Flip, DJ + Frac

This is gonna get steep, so buckle up.

When you are looking for the end of an impulsive wave structure, you are looking for 3 things:

  • strength having transpired (Stochastic RSI, blue vertical highlights)
  • a doji coming after
  • as well as a settled fractal

Where this approach starts to fly against conventional wisdom is where the actual wave terminates – for that’s never a swing high or a low.

Think of this as a confirmation system, where you are finished only when the all stars align. In case of a Wave one, these three items can be on the very same candle. There are no rules for if the fractal or the doji is due first, but you should only start looking after the key vertical signal. And of course you would prefer the doji and the fractal to arrive on an equal or further out end in the direction.

In terms of where are we at, that’s not very clear.

The white down move is an ABC move down, would pass for a Wave 5.

The possibilities for this up move:

It could be a Wave 1 if it took out the swing high, which it has not yet.

A Wave 2 cannot retrace 100% of wave 1 says Elliott, but I don’t think that the down leg was a Wave 1.

There is certainly out of whack swinging of the pendulum, to shake everyone off by the time the real move comes. The Effect caused a counter Effect.

Looking at the image above I would say this is an enormous volatility whip, and from a slightly higher low a Wave 1 up could start.

This whip down whip up move steepened the angle of the axis.

Looking at this second image, the move up could be an ABC. This current move up has achieved 4.6x stretch from the mean. A real crash move could achieve a 9-11x stretch, and as the sequence goes, the downside is due for a spin. The counter move would be of similar magnitude, but (say 7-8x) but due to the distance traveled and the distortion of the angles this overall would take price much much lower even at the bounce high. Sorry, Mr. Hunter.

Last lesson: an end of a Wave may not mean the end of a Wave structure. Impulsive moves don’t end on strength, but on a reversal divergence. A “0” print on the RSI2 is a clue for you that you have not seen the top.

     if (RSI2[i]<87 && RSI2[i+1]>98){
         ObjectCreate("CTRYv"+DoubleToStr(i), OBJ_TEXT, 1, Time[i+3], 96); 
                     ObjectSetText("CTRYv"+DoubleToStr(i), "NOT A TOP", 16, "Impact", DarkGreen);
        if (RSI2[i]>13 && RSI2[i+1]<2){
         ObjectCreate("CTRYv"+DoubleToStr(i), OBJ_TEXT, 1, Time[i+3], 26); 
                     ObjectSetText("CTRYv"+DoubleToStr(i), "NOT A BOTTOM", 16, "Impact", Purple);

If today closes 27 pips below the peak (~1.1457), the reversal will have taken place.