Practical use of Elliott Wave analysis

[tech/a]

Tech, we went up yesterday, so does that indicate a potential breakout, or need to give it a confirmatory leg up?

If that wasn't the top of 3 then with EW do you just continue to wait for the confirmed top before shorting again?

Or, does moving through this zone completely change the count to something more complex?

Kennas
Im looking for weakness.
I havent seen it yet in the ORDS nor in my portfolio.
I have seen some pulling back while my portfolio increased yesterday 1 sold on a trailing stop and my high profit of the day was well above the closing profit.

I saw an opportunity short in the DAX and am still short there.

The next level in the XJO is 5030 resistance.
If that is broken then the count will alter once more.

Im looking very carefully at any new prospects as breakouts are now displaying that they are forming last legs or Wave 5 s in the charts I'm seeing.

That doesn't auger well for trades on the long side.

 

[tech/a]

Kennas
Im looking for weakness.
I havent seen it yet in the ORDS nor in my portfolio.
I have seen some pulling back while my portfolio increased yesterday 1 sold on a trailing stop and my high profit of the day was well above the closing profit.

I saw an opportunity short in the DAX and am still short there.

The next level in the XJO is 5030 resistance.
If that is broken then the count will alter once more.

Im looking very carefully at any new prospects as breakouts are now displaying that they are forming last legs or Wave 5 s in the charts I'm seeing.

That doesn't auger well for trades on the long side.

Fortunately the 1 dax contract has preserved my portfolio which got belted today!

 

[Sean K]

Fortunately the 1 dax contract has preserved my portfolio which got belted today!

The weakness yesterday must certainly now add to the 3 top. Quite a turnaround from the day previous. UK down quite a bit atm. Interesting to watch it unfold.

 

[aarbee]

Im looking very carefully at any new prospects as breakouts are now displaying that they are forming last legs or Wave 5 s in the charts I'm seeing.

That doesn't auger well for trades on the long side.

Hi Tech,

Can you elaborate on your mental process/tech analysis involved in determining that a breakout is on its last leg. I am new to this sort of analysis and find it very intriguing.

Cheers

 

[tech/a]

Hi Tech,

Can you elaborate on your mental process/tech analysis involved in determining that a breakout is on its last leg. I am new to this sort of analysis and find it very intriguing.

Cheers

Ill put it in the breakout thread.
Dont have time now but if I forget remind me.
Boggo knows what I'm on about as well and he may put up a chart or 2 he did an example the other day---cant remember which thread.

Just closed the DAX trade.
Basically hedged todays catastrophe

 

[Boggo]

Boggo knows what I'm on about as well and he may put up a chart or 2 he did an example the other day---cant remember which thread.

This may be the one you are referring to tech/a, if not I can pop an example up.
https://www.aussiestockforums.com/forums/showthread.php?t=22194&p=624432&viewfull=1#post624432

 

[tech/a]

Thanks BOGGO explained perfectly.

Where to from here tech? Back down to recent lows (some type of flat pattern) or a small breather and higher highs?

I liken bullish moves to a train--if you want to pull it up its going to take a while.
Bearish moves are like dropping a ball on concrete---the higher and quicker it falls the bigger the bounce.

This reversal deep and quick has me think its sending a message of weakness.
There will be a bounce and its strength will tell a lot. I expect that if new highs are made it will be like extracting blood from a stone!

So my plan is to look for short opportunities on indexes and wait for signs of corrective patterns in the now much lighter portfolio.
In this fickle corrective pattern trends will be short.So my time frame also shortens more than usual as does my risk down to .25 and .5% (Portfolio long plays)

WEEKLY XJO CHART click to expand

View attachment 42384

 

[markhocky]

Hi all,

Thought the readers of this thread might find the following of some use.

CSS analytics is running a few posts on how to model / code more subjective studies like Elliot Wave to help with systematically testing.

http://cssanalytics.wordpress.com/2011/04/10/css-wave-theory-building-blocks-part-1/

I don't pretend to know anything about how EW works, or how to apply it, so can't vouch for how good the method presetented by CSS is. But nevertheless thought I would share so those that do know can assess.

Cheers,
Mark.

 

[Boggo]

Hi all,

Thought the readers of this thread might find the following of some use.

Cheers,
Mark.

Interesting Mark, I have seen a few attempts at trying to simplify or alter the theory of EW to fit with the "current" market but the end result usually ends up back with the original theory and the associated basic rules.
The basic application also always comes back to the same, ie, it works 50% of the time on 50% of the market and that is where you then apply Robert Miner's 'kiss' principle.

It will be interesting to see some examples of what he is doing though when he produces the next parts.

One of the links on that page you link to has some worthwhile comments, it refers to Forex but applies to all markets.
Both the XAO and the XJO are examples at moment where you have to look at the weekly for a better picture of where the daily is likely to be heading.

This is a comment from that site...
"Like any other technical analysis, EW by itself can never be used in isolation and hence it has to be handled with a lot of caution. The 2 things i look for in EW are a) on a higher time frame is it an impulsive wave or a corrective and how does the wave look on the lower time frame b) Corresponding momentum"

http://fourweekforexchallenge.wordpress.com/2010/02/13/wave-theory-applied-to-forex/

Cheers

 

[Chris45]

Boggo, In your post #16, https://www.aussiestockforums.com/forums/showthread.php?t=22194&p=620943&viewfull=1#post620943 your chart of ELM showed a "max target" of just under $3.00, which looks like a fib. extension from somewhere plotted by your software.

I see that the high on $4-Apr was $3.00! Who says this EW/fib stuff doesn't work???

 

[Wysiwyg]

I see that the high on $4-Apr was $3.00! Who says this EW/fib stuff doesn't work???

Everything "works" but not all the time. Anyone that has been in the game for awhile knows this.

 

[Boggo]

I see that the high on $4-Apr was $3.00! Who says this EW/fib stuff doesn't work???

Everything "works" but not all the time. Anyone that has been in the game for awhile knows this.

Works 50% of the time on 50% of the market is a starting point.

Its all about knowing when it may be working and making full use of it and more importantly recognising when it stops working or may not have actually been working in the first place and having an exit strategy or revised plan.

There are numerous ways of catching breakouts (such as ELM) but the real art seems to be knowing where the breakout may continue to and if it is worth pursuing.
This is still a major work in progress for me and I still have a way to go but I can see the potential in it.
Its what tech/a often refers to as knowing where the stock is in its life or cycle at the breakout or reversal.

Assuming that we have had a W.3 on ELM then the theoretical completion of W.4 may be around the areas shown below.
(click to expand)

 

[Sean K]

This reversal deep and quick has me think its sending a message of weakness.
There will be a bounce and its strength will tell a lot. I expect that if new highs are made it will be like extracting blood from a stone!

So my plan is to look for short opportunities on indexes and wait for signs of corrective patterns in the now much lighter portfolio.
In this fickle corrective pattern trends will be short.So my time frame also shortens more than usual as does my risk down to .25 and .5% (Portfolio long plays)

WEEKLY XJO CHART click to expand

View attachment 42384

Tech, that chart still looks like a sideways move since late 09 with no sure sign of either way except for the potential W4 top.

So, that is the basis of the short bias, correct?

I'm still trying to make something more conclusive and tradable about this position in the market.

(Yes, I know TA is not concrete, just probabilities - disappointed you thought I had that position after 5 years..)

However, this is 'practical use of EW' so, I think it's important that it looks like it's tradable.

At the moment, you application of EW has made you sell positions in preparation for the W5 down by what I read. That will change with a move up through the W4 and significant resistant zone. Si?

 

[tech/a]

I'm still trying to make something more conclusive and tradable about this position in the market.

(Yes, I know TA is not concrete, just probabilities - disappointed you thought I had that position after 5 years..)

However, this is 'practical use of EW' so, I think it's important that it looks like it's tradable.

Elliot for me in all trades I take gives me an indication of where the stock or index is in the context of its current life.
Is it topping
Is it starting a new Trend
Is it in the middle of a trend
Is it in a corrective phase.

So practical use of Elliott goes (in my view and use) way beyond trading Elliott as a singular methodology. It can and sometimes I do use it as a single stand alone trading tool.
But currently the Index which we are looking at is in a corrective pattern and topping in that pattern.
Ive only sold weak stocks and they were exited by tightening trailing stops.
New trades are always being taken but I use tighter stops and smaller position sizes---due to the fact that this market is weak--LONG.
While looking for weakness last week I managed to trade a short DAX trade overnight which kept my capital neutral while the constituents got smashed that day.

At the moment, you application of EW has made you sell positions in preparation for the W5 down by what I read. That will change with a move up through the W4 and significant resistant zone. Si?

Its made me cull weak positions---they have continued to be weak holding them would have been MORE costly. Stronger moves have appeared and I have bought new positions (See above) I have 3 new positions logged for conditional buys tomorrow.

Running my portfolio is like a river continually flowing.
Those who have more a set and watch trading style just will never get their head around how I trade.---in a discretionary manner.

No point in being discretionary if you set your trading to a set plan or system and watch it pan out---might as well have a tested system.

My constant monitoring is designed to keep the numbers skewed in my direction.

Hope that helps but I can see you struggling with analysis which isn't definitive---you expect it to be--I dont--in fact I expect it to be anything but definitive and trade in a discretionary manner to accommodate that.

 

[Sean K]

Hope that helps but I can see you struggling with analysis which isn't definitive---you expect it to be--I dont--in fact I expect it to be anything but definitive and trade in a discretionary manner to accommodate that.

Not all Tech.

I have not see one practical EW generated trade yet.

Unless I missed it while sipping English brew over the past couple of weeks.

Point us to a trade.

 

[tech/a]

Perhaps I should have titled the thread
MY Practical use of Elliott Wave analysis.
OR better still
Practical use of Elliott Wave analysis which will satisfy Kenna's
In the former I have and will continue to explain if others are deriving benefit.
In the latter I cannot satisfy you Kenna's.
Elliott by your definition has no practical use.
Never has and never will.

Finally the title never was
Trading exclusively with Elliott wave analysis.

 

[IFocus]

Not all Tech.

I have not see one practical EW generated trade yet.

.

kennas you are driving me nuts.

The tile of Techs thread is Practical use of Elliott wave which I think has been excellent for anyone interested.

Its not practical trading of EW even tho Boggo on the forum has shown some excellent examples.

If you can get a look at market conditions and if you can get a look at what stage the market is at then you can get a look your probabilities when to take positions using a method that suits that time and place.

If you can do this 50% of the time it can skew the numbers hugely in your favor.

BTW I have seen the market make fools of all EW gurus but then that's what the market is designed to do.

 

[Chris45]

Assuming that we have had a W.3 on ELM then the theoretical completion of W.4 may be around the areas shown below.

Boggo, I calculated ELM's W2 was an exact 50% retracement of W1, and W3 was approx. a 250% extension of W1 (close but not quite a Fib ratio ).

W2 looks complex and it now appears to be in a simple W4 A-B-C with W-B retracing 36% (~Fib38%).

A 100% extension of W-A gives a target of $2.08.

Your software gives two pairs of retracement levels for W4, the first pair for a retracement of W3 and the second pair for a retracement of W0-3.

Which pair, from your experience, has the higher probability of working in this situation?

Of the Fib levels printed, the $2.14 (~$2.11 Feb Hi) and $1.64 (~$1.65 Mar Lo) would seem to be logical support levels.

My very unsophisticated KISS trading approach, if it gets down to $2.14, would be to buy a breakout above a downtrend line from the $3.00 top so I'm interested to hear your thoughts how you would trade it.

Cheers.

 

[tech/a]

Kenna's

This is the same XJO chart in Daily.
You can see that it is panning out as expected.
So everything that is in place has been as the analysis indicated.

 

[tech/a]

ELM by Advanced GET



Note how this count has now altered as wave 5 in the original chart extended.
Altering the internal count of the wave.

.