A recent Qual-Target defined a reversible level at 1.28377 (05 SEP 2014). However, closer scrutiny of the chart at the DAILY level reveals the presence of Bearish Wolfe Waves pattern ("WW"). If you recall from yesterday the dire impact that this WW can have on price action (see this free fall here as a mere visual example: tradingview.com/v/tOzh2Ona/ ).
In this particular case, I see no hurdles preventing this worst-case scenario from happening, except for the predictive/forecasting done this past week (05 SEP 2014), when the model defined a significant floor at TG-Lo = 1.28377.
WOLFE WAVES COULD PUSH PRICE FURTHER DOWN:
While this TG-Lo remains valid, WW patterns have a way to enforce their ways, as they seek completion at the level where price makes contact with the pattern's 1-4 Line. Considering the current momentum, there may remain even less doubt as to this feasibility even if and once price comes to validate the first bearish target at TG-Lo - 1.28377.
OCCULT GEOMETRIES ALIGN WITH WORSE CASE SCENARIO
First, let me say that the target defining the worst case scenario was defined by the predictive/forecasting model I use. However, I only considered it plausible due to price's proximity to the WW's 1-4 Line. Therefore a fair amount of selection bias has come into play here.
For this reason, I decided to appeal to hidden measurements from occult geometries, defined as follows:
1 - Shape #1 = Height of FIRST swing low 2 - Shape #2 = Height of SECOND swing low 3 - Shape #3 = Differential between Shape -1 and shape-2 at FIRST correction 4 - Shape #4 = Differential between Shape -1 and shape-2 at SECOND correction
- Note that the correction per Elliott Wave Principles ("EWP") would have defined a LOWER border of shape-2. However, this is a geometric definition of price action, where the angle and moment were used to defined the start/end levels of shape-2.
5 - Shape #5 = This is the shape named "3+4", as it is simply the added heights of shapes #3 and shape #4 stacked together.
OBSERVATION:
While most novice traders might not find this a rewarding exercise, I have come to enjoy discreet and occult geometric events such as these ones. In this case, geometry is CONFIRMING the WORST CASE SCENARIO's target at TG-x = 1.26696 by simply adding shape "3+4" onto itself, thus equaling EXACTLY the height of shape #1.
In other words, each retracements at shape #3 and shape #4 representing half the height of shape #1, would be doubled to point exactly at the worst case scenario target.
Whether purely random or not, I have done this exercise in no such randomness, but instead based on the same manner in which several other targets have concurred with the model using the same arithmetic process of shape additions and subtraction, based on their relative positions to one another.
OVERALL:
Aside from this occult geometric "amuse gueule", both the predictive/forecasting model and the WW demand a lower price target than originally defined. As this overall price action completes, a retracement of 50% would then be expected to occur, repulsing these bears back up to the 1.33307 level.
Cheers,
David Alcindor Predictive Analysis & Forecasting Denver, Colorad0 - USA
If i am not misstaken, then wave 5 in the Wolfe wave needs to be outside the trendline (wave 1 - wave 3) also known as a fakeout. The buysignal comes when price gets back under the trendline and closes under it. Then you have a valid entry and a target at the date when the two wolfe wave trendlines cross. The wave 5 outside is rare and the reason this pattern rarely happen.
Now try starting a lower trendline at the low 2014-04-07 (W1) and the higher at the high 2014-05-08 (W2) your W3 2014-06-04 and W4 2014-06-30. you will see W5 is now way outside, was waiting for it pre gap, it's still valid, but will most likely not trigger as the buysignal is now at 1.3220 (+close above) and target is 16 tradingdays away at 1.3730 and the pattern will fail also in 16 tradingdays. And i doubt that we get such a rally BUT anything is possible and it is still valid.
4xForecaster
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Hello @frankiev2:
You wrote: "If i am not misstaken, then wave 5 in the Wolfe wave needs to be outside the trendline (wave 1 - wave 3) also known as a fakeout."
Yes, you are mistaking, indeed:
1 - The WW does not carry a "fake-out".
Q: Perhaps you are referring to Elliott Wave's "Throw-Over"?
2 - Also: Point-5 is integral to the 1-3 alignment, and cannot be outside of it.
Q: Perhaps you are referring to Point-5' ("five prime"), which is OUTSIDE of the 1-3-5 alignment, and is defined by price crossing at the translation of the 2-4 Line starting at Point-3.
(a similar translation occurs out of Point-1, this defining Point-5" ("five-second").
WW is all about line transposition and price validation of these transposed lines, which is different from Elliott Wave where the signature "Throw-Over" in a bearish expectation at Point-E (equivalent to Point-5 here), or the "Throw-Under" in a bullish expectation, still falls short of the WW's 1-4 Line purpose. In WW, the 1-4 Line is defined as the "Take-Profit", or "Profit Line", when in contrast, the EW gives no purpose to any other geometries outside of itself.
Feel free to link any literature in which the purported "fakeout" occurs.
3 - Another and last point, which you make erroneously:
You wrote:
"The wave 5 outside is rare and the reason this pattern rarely happen."
This could not be farthest from the truth. Although I do not have the exact data, I can say with all confidence that departure of price out of its 5-prime position would make about 60% of the cases, whereas a departure out of Point-5 would be about 30%. The rarest is the 5-seond departure, which occurs in the most aggressive circumstances.
Again, I would like to read more on the sources you have encountered. I do not dispute you, but the sources that may dissiminate wrong information on traders interested in these geometries.
V/r,
David Alcindor
4xForecaster
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@frankiev2 - Please, be sure to use the top-right icon in order to insert visual aids to what you are describing. I am not at all capable to read and understand where I am supposed to lay eyes. I am a sad case of 100 percent visual-aid dependent - No URL links please.