Selling Weakness

I think I have a Stochastic Bars Mixed / Hybrid (my rendition of the good old Stochastic Bars) laying around somewhere.

For 15 mins, change the values to 40, 100, 160.

Selling Weakness is a comparison of red print present at the last Swing Low (i.e. Factal).

Sign of weakness circled. From the swing low, go in on 27, 34 & 40 pips pullbacks to build a holding. Do this all the way until your breakeven stops would start taking out your last positions. Oh yes, you want to be on the right side of the Market Makers, so your trading direction would have to be away from Mr. Maroon.

You already know that the Christening ceremony by the Market Makers is over with, and there is no reason to think that this move down would end before hitting the outlier leg. Wave 3 of Wave 3 just commenced.

Now you just need a good auto trail stop system from me plus the info above.

I’m guessing you could fill in the blanks about how buying strength would look like.

a drawing from yesterday

What do you know, an E-16 pullback for a wave 4 of Wave 3! So early on… A double dodge ball at the Market Maker Arena! Is this a real fight here or the MMs want to hand out more longs before the continuation?

Who knows, all is well as long as you manage to extract moneys without adding to your unhedged, naked directional risk. I for one love markets going nowhere and providing cash every couple of minutes. The math is still 100x$5=$500.

The bias? That has not changed until you see 5 hourly closes printed above Mr. Maroon. A wave 4 has ambitions. Gotta wait it out.

A trifecta then, throwing in a back test of the previous channel?

Certainly a head-scratcher, but it could be that the trend channel drawn is just too steep without this adjustment & redraw. If it is about that, then a 3rd touch would be needed to upgrade this resistance line to a trend line.

The answer to how high the wave 4 of Wave 3 down could go was in the continuation divergence. As wave 4 would be setting up a continuation divergence of its own, the price had to become more overbought and stay lower than the last reference point.

All of this however calls into question my wave counting. The fact that this move up went back through Mr. Maroon says that this was a Wave 2. Wave 3 down has not started yet, and based on this, it could be a long one down.

Now the channel looks about 45 degrees, the sustainable kind.

Close enough

Nick’s Lessons #6

How to interpret the Stochastic Combo and the RSI2 Hedge?

(The Buy Next correction refers to the sharp down spike into the oversold)

When energy gets exhausted, a sideways to counter direction move is necessary to recharge it.

The upwards purple has no other meaning than showing that price recovered quickly.

What do you think needs to happen now, that the energy completely tanked?
It retraced all that move before continuing down.

Price pulled back to 1/2 way between Mr. Maroon and E32

Also, look at the subtle change on the Stochastic Bars pointing out the location of the ultimate head

So, would there be a higher high? Very likely. The question is how much the beat would be. On the downside it was 2 pips.

Bear Market!

Bear Market – Defy Reversal – Mr. Maroon – Fractal Switch

Wave 4 Down

(Indicator: 2 Fractals)

Long / Binary Overhedge from Maroon to Target

(Indicators: Comfort Levels 4h, God Awesome Indicator V1.71, Fractal Switch, RSI2 Hedge)

Long / Binary Overhedge from Wrong About Reversal to far end of Check Point 3

(Indicators: Where to Sell, Where to Buy, 15 Min ATR Targets, Maroon Attack, Fractal Switch, Stochastic Combo)

If you want to do this without the right calculations / indicators, be my guest.

They are not for free, for they are my life’s work, but I am willing to give you copies for a reasonable donation.

Macdulio@yahoo.com

What Is a Pullback?

Tempering with the 15m time frame, I concluded the following.

During a channeling move, when price crosses over the local E-16 and makes the first two fractal prints, it gives you a hint of the form of the continuation.

You’ll get a flat/shallow pullback that I refer to as a bridge if there is virtually no progress between the 1st and 2nd print.

The following images are with bridges (concentrate on the bottom side):

A bridge can yield you 1-2 pushes up, but only 1 is guaranteed. The entry is virtually at the height of the 2nd fractal or just a tad over.

A deeper pullback / real pullback shows progress being made between the first and the second fractal.

Such pullback may take several layers to get in, and it would always yield 2 pushes (2 x 3 fractal sequences). In this example there was another 20+ pips on the downside from the 3rd fractal, so -26: would had been the perfect entry.

This pullback committing a shot over the bow is the telltale of a divider wave, in this case, a Wave 2, meaning yet again, is that we are still in a Wave 3 to the upside until a Wave 4 pullback appears with its shot over the bow as well.

God Awesome V1.71

Much of a market’s story can be read from RSI2 divergences.

I’ve got Mr. Maroon on the screen, my Modified Fractals and the God Awesome V1.71 on the screen.

Vocabulary first.

Reversal Divergence is when the Oscillator shows a higher reading on a lower low or a lower reading on a higher high. (Yellow lines)

Continuation divergence is when the Oscillator shows a more oversold condition at a higher low or a more overbought condition on a lower high. (Red and Brown lines)

Let’s try to read it together!

Pay extra attention to what is happening with the continuation divergences.

After the market reaching a full charge (white stripe at the low), it made a reversal divergence with the back test down (see the two fractals connected at the low with the yellow).

On the way up the market broke the secure high (set by the previous continuation divergence).

Price had a smack down at Mr. Maroon which resulted in a higher, secure low as the continuation divergence underlined it. (Starting point of Wave 1 up).

There was a continuation divergence on the way up that got broken (brown) and eventually a new, secure lower low was printed with the red line down showing up.

Wave 2 down was coming back through Mr. Maroon until a secure, higher low got printed which was accented by a reversal divergence as well.

Another continuation divergence was broken on the upside as well as a reversal divergence.

By all standards this is a Wave 3 up, yet the market is not running yet.

Why? Because there is a lot of head scratching here, at the oversold neckline (20%).

The Comfort Levels were added for better gauging.

All systems go for a buy, but the belief in further Euro strength is lacking, or we are just waiting on the start pistol. (CP2 starts at 1.0975)

The current market theme has been a strong Wave 1, a lackluster Wave 3 and a rip your face off Wave 5.

We could be facing something similar here.

A mean reversion could take the price back to 1.10.

Price is banging its head into the lower guard rail (Neon Green).

God Awesome copy can be obtained upon making a donation of your choice to macdulio@yahoo.com

As for actualities, I made the following routine for better entries and exits.

2 Fractals is its title, and was made for 15 minutes.

Fractal Switch

An indicator I made today, that utilizes the turbulence taking place around Mr. Maroon. Excellent for high volatility markets, such as right now.

For sale at the price it would be worth to you.

Write to me at macdulio@yahoo.com

I did not just go back and cherry picked the best looking calls, these are the 10 last calls in reversed sequence.

As you can see, every plot will give you 2 trades. 1st trade is
Go Long / Short as close as possible to the trigger and use the Target for exit, apply a protective 1-pip trail once in gains, set it and forget it. Your risk and reward values are printed on the screen.
The second trade is Re-Opening in the same direction upon reaching the Wrong About the Reversal level – a buy/ sell stop pending with a trail stop associated.
If the other end gets hit, the Close / Hedge level is where you open the counter directional trade, which is another buy/sell stop.

2 more for kicks.

As you will find, if you want to define the risk for the Wrong About the Reversal entry, you can just plug in the Target level, and for the Close/Hedge/Counter Direction Trade, the Trigger level could be utilized.

As for the size of the secondary trade, it should be the normal size if you do not have any holdings, but double the size if you are traveling with a baggage in the wrong direction.

& if I increase my Maroon tolerance by a moon hold of 11 pips, this is what I end up with:

Not that it wasn’t obvious that the flat bottom would be undercut after a failed Wave 1 attempt (or a sign of strength), but it is nice to see that this is a familiar picture for the routine after giving it some slack.

Quote from my Friday morning letter:

This time, having printed 5 waves down I do not expect much reaction from E32, I think Maroon would be touched

One last smack down to a lower low is likely especially with the current flat bottom