WARNING:
I want to describe trading breakouts, versus trading riskier scenarios where you can take hard loses from failed analysis.
Here is a possibile bullish scenario as an alternative to my current bearish ideas:
- My subwaves 1,2,3 down are not part of a bearish 5 wave impulse. They are actually a downward ABC wave.
- That means this upward subwave 4 is actually the start of wave 1 of a new bullish impulse up!
Here’s how to wait for confirmation if we are in fact in the bearish scenario or the bullish scenario:
1. Wait for waves A-B-C of subwave 4 to complete as described. When Subwave 5 starts and the price action heads downwards, watch for it to drop well BELOW the point of save B of subwave 4. This confirms the bearish scenario! If it was a bullish 5 wave impulse up, the third wave up should not drop below the subwave 2 point (which we are currently calling wave B).
2. Wait for waves A-B-C subwave 4 to complete as described. Once we see the downward action of subwave 5…. watch if the prices rises well above the top of subwave 4 (wave C) at any time. This kills the bearish scenario and validates the 5 wave impulse up! Once subwave 4 clearly completes, we should not see it price go above it!
Remember to full confirm the two threshold's I describe above.... we are looking for good volume when we move past those thresholds. Also we don't want to take action (e.g. trigger a buy or sell) right at the threshold, it is easy to get faked out by a sudden peak. Play it safe and take action nicely past the threshold.
Aggressive trades can try to trade every wave but it is very difficult and risky…. masterful asset management is required, with tight intelligent stop order (that won’t get triggered on fake outs), as well as laddered buying and selling (instead of one big buy or sell order….. a laddered series of orders to avoid to change of missing an order fill all together).
The much safer play is to trade confirmed breakouts!
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Cheers,
LLCoolRS
Disclaimer: This is not financial advice, and is given for educational purposes only. I make the charts, you make your own trades. Never blindly follow internet advice for your financial decisions... any analyst can and will be wrong.