Secondary Wave Structure

The Secondary Wave Structure is a volatility freak.

It is brought on by a prolonged, 3-wave quick break (the waves may be only visible on 15 min or even below).

The secondary structure does not have a good footing, for it does not originate from a stretched zone (Bull Zone or Bear Zone) and is preceded by a primary wave structure.

I call it a volatility freak, because the actual, directional turns (from Wave 2 to Wave 3 and from Wave 4 to Wave 5) only happen at extremes with a well pronounced continuation divergence.

Wave 1, 3 and 5 in the secondary wave all set up reversal divergences (30 minute chart) and Wave 5 has a defined 3-wave push playing out.

One hint would be looking for a red tail + higher high / lower low (depending on direction) on the 30-minute.

The Liquidity Break goes too far: a Wave 1 would fail not much beyond the sound barrier.

The daily fuel limit was known even before the day had started.

The final Countup is on.

The 5th Wave is expected to start from beyond E-16.

finding these two red tails:

ExtDownFractalsBuffer[i+3]!=EMPTY_VALUE && High[i+1]-Low[i+3]>80*Point && High[i]<High[i+1] && High[i+1]>High[i+2] && iMA(symbol,0,32,0,MODE_EMA,0,i)>iMA(NULL,0,135,0,MODE_EMA, PRICE_HIGH,i) && Close[i+1]>iMA(symbol,0,32,0,MODE_EMA,0,i+1)
      && Low[i+2]>iMA(symbol,0,32,0,MODE_EMA,0,i+2)
&& Low[i+3]>iMA(symbol,0,32,0,MODE_EMA,0,i+3)
&& Low[i+4]>iMA(symbol,0,32,0,MODE_EMA,0,i+4)
&& Low[i+5]>iMA(symbol,0,32,0,MODE_EMA,0,i+5)
&& High[i+1]>iMA(symbol,30,414,0,MODE_EMA,PRICE_HIGH,i+1)

Final Countup

Bear Zone & Bull Zone rules:

Once price had engaged the 1-time-plus stretch zone from the mean (by making two highs above the upper guard rail or two lows below the lower guard rail), the rules become rather simple.

To reverse the direction, the counter-party becomes put on a timer.

The chronometer starts counting up from the last fresh hourly high/low to 9.

The chronometer gets a reset upon a new 22-sample high/low.

So, what is this counting good for?

For figuring the perfect entry for a continuation and knowing when a Wave 1 was printed and price direction reversed for good.

Let me explain.

Once you have printed 9 on the counter, you most likely have seen the resistance level already. Your aim is a lower low – trail stop advised, for there is directional rotation in these zones: people get put with the bag.

If Mr. Maroon gets hit within 9 hours, the game is over with.

This upside example shows that a continuation support was not made successfully. The second set of numbers are there because I am looking for two highs above the guard rail within the last 10 samples.

Bonus image:

Self explaining shot about how you figure the target of a Mean reversion.

Draw in the five waves up for a mind practice and see if you got the Wave 2 trickling back through Mr. Maroon.

The 15-minute Answer

A terminal wave can be a Wave 5 as well as a Wave C. What is important is finding the area with the muted & dropping counter-directional volatility.
On the 15-min chart you should see a sequence of 3 or 4 spikes where the last 3 would be (in order) the Measuring leg, the Divergent leg and the Beat.
The Beat would normally exceed the Measuring leg on Eur/USD by 7+, 15+ or 22+ pips.
The translation is that once you have a Measuring leg and the Divergent leg printed, you should make an effort for scaling out of your directional holdings and start getting in at every step with 1/3 of your pre-determined maximum size.

I have spoken of the Wave 2 (and Wave 1) having to be confirmed by the Market Makers which means that the wave would have to cross Mr. Maroon on one side at the very least.

Every Wave 2

Notice something important?

Every Wave 2 makes a move back through Mr. Maroon. Here, it represented as an inaccurate, single thin line on the 4H HL2 values as E-17, but I monitor for this move on the 30-minute chart where I plot the E-135 high and low lines making for a double band.

(the deep purple lines are terminal Wave 5-s)

Sorry Seems To Be The Safe Word

What is a scam? It is a promise that does not get delivered. The intention isn’t always clear.

We all get scammed on day to day basis.

It is not always as obvious as opening an account with a Binary Forex trader.

Say, if you sign up for overtime at one place, and they grant it to you, then you have to say no to an other offer, but in the end they cancel the shift on you and now you’re left with no offers and no income, were you scammed?

Think deception, misleading to grasp the concept of a scam.

That firm that calls itself Atlantic Housing puts you with a bill upon moving out that is twice larger than the deposit and all entries are made up excuses (such as this and that was broken, when they were not), then what business is this company really in?

The caused damages may be material as well as immaterial, such as emotional. Some scams you may never recover from.

Who is going to give me back the 1.5 years of my life when I could not meet with my own child and wife thanks to the scam that was running under UK Immigration Barristers?

We lost a great deal more than just a fee, several years without income and all the expenses during including being penalized for Visa extension every 3 months. This company did nothing but made sure you would fail the application due to being incomplete. Mind you, this was the number one find on Google under Immigration Lawyers UK at the time.

They even tried to peel off a second layer of skin, to which I responded: “I have nothing left to give”.

So don’t believe anything you find on the internet just because a search engine finds it. I have become a UK citizen since and so did my daughter, but this didn’t repair all of the caused damages.

The above things would probably explain why I am so adamant about fighting scams.

A Ponzi scheme is a scam for obvious reasons.

Here is what I wrote down this morning:

I am convinced that these companies utilize Ponzi scheme as their business model.
If they “financed” 300 people, that’s likely five times as many attempts = 900,000 USD revenue in a year (That does not cover the promised 30M though). You have liabilities of a few workers with Eastern European salaries to do the database handling / web surface.
Remember, one has to submit the invoice for a x 0.7 amount that you get to work on figuring out. Such scrutiny is rather cheap.
Of course there are no risks for the company until the new entry interest drops down and the “funded” accounts start claiming more money that is flowing in.
It is easy to absorb the losses on a demo account.
The idea owner may even feel like he’s doing good by eliminating all risks for others. Almost all risks.
The company was funded in 2014, when it was local.
Now it is listed in the US with unknown number of workers and comments about not even responding to emails. 
I personally don’t think that there are more than 3 or 4 people running this, the rest was a matter of T-shirts and posing for pictures.

Take for instance the Institute of Trading. Perfect name for a scammer.

They sell mentoring programs for 60k or 15k depending on if you want a 10-day holiday up front.

Those ex Execution traders running the scheme capitalize on the credits they earned by having worked for the famous Lehman Brothers.

Then you have to open an account with Valbury, for a minimum of 15k. Then they let you keep 35% of your own profits – and people are lining up for this suicid slavery in hopes of inside information that these kooks may be in possession of when they are citing “80% fundamental” analysis.

Do Not F Up The Bias

This would had been my advice a decade ago to myself when I started trading.

I will walk you through how I knew exactly (for the most part) what wave was the market in today.

Two days ago, when I was mad wrong, I was refusing to acknowledge this 5-wave structure down as valid, for the 5th Wave seemed to have fallen so shy of the low made during the 3rd.

Green circle: 4-H Maroon Fake-out

Nonetheless, this was right. What was particularly hard to digest was the fact that the market made a turn back up without a qualified footing: it never even got close to the Bear Zone to have the chance to do so.

Yet, thanks to the news, someone went in shorts to some irrational extent that temporarily suspended the possibility of further progression downwards -> the top would be re-tested.

Now, once these 5 Waves were figured out, on the 1H you would be able to spot something no one ever talks about (other than me): the volatility whip. It is marked in white; they usually appear after a 5th wave, and although the price fluctuates a bit from the starting point to the end point, they do not become part of the wave structure, they are the free ball thrown up over the net waiting for the first team to jump on it.

There are tremendous implications to this (shout out to Mr. Elliott), and it is more than shocking that a Wave 2 up can go way beyond the starting point of Wave 1, but this is how things are.

To add some more shocking ripples down the spine, here are other facts nobody even considers.

There is no Wave 1 or Wave 2 without the approval of the Market Maker.

See, all they have to do is stop giving fills until they manage to dish out their surplus in one direction.

I’ve been saying that they are hiding behind Mr. Maroon, which is the 135 EMA HIGH and LOW on the 30 min – or for less smooth results turn to E17 on the 4H.

For a Wave 1 to be validated, two things has to happen:

  1. The Market Makers must let it cross the wall of their stronghold
  2. The Volatility Whip’s terminal must be broken decidedly

(I fine-tuned the lines with the 30-min RSI2 readings)

There are other simple rules to be found, such as, the wave structure would only make progress if Mr. Maroon gets violated by the first wave.

Now, you can probably start to appreciate why did I adjust my targets on my shorts to 1.1070 on the way down, in Wave 1: because the low point of the RSI divergence’s measuring leg had a low of 1.10788.

No, I did not wait for any one of these to go to target, but the lesson here is about the right thinking (that can make a world of difference). You can be right, have low self esteem and still make plenty of money.

Which brings me to my last point.

Before the FOMC, Wave 1 and Wave 2 were printed. How many directions could had gone the 3rd Wave?

If you really think that a news event like this can have a not already decided outcome, then wake up & smell the coffee.

How not to F up the bias?

I thought about this a bit after the FOMC.

If you were to use two bias numbers, you could get a good picture of which way the market & accordingly the wave count would be unfolding.

Refer to the cyan chart-shot above.

When you had your 5th wave, the primary bias was set.

1.0 means – up & away, -1.0 means down, down and down some more.

The secondary bias would come from price being above the Green River or below (414 EMA per 30 min) cca 52 EMA per 4H.

The range of the secondary score would be 0.25 to – 0.25

And the change would occur if price just went over the Green River – turning it to 0, and the quarter bias would be supplied by after a cross over making a new 4-hour RSI2 oversold / overbought print. For instance, if price slips below the 52 EMA and stays there, becomes hourly overbought, then you just set the secondary bias to -0.25

From all written above it is clear to see that a mean reversion would always be happening with a + – 0.75 score – and there is one in progress right now.

To answer the question, where would you be wrong about…

…being short in the bull zone – I now have the 31-pip displacement value in cyan printed with brackets (must go long above kind of thing).

…in case you are wondering where the Volatility Whip ended / Wave 1 started on the way down: