Thank you Peter,you are so right.Your explanation was great and a lot of work so thank again.Mary
-----Original Message-----
From: Peter McIntyre <mcpetetrader@yahoo.com>
To: 4XONTARIO <4XONTARIO@yahoogroups.com>
Sent: Sat, May 14, 2011 9:35 am
Subject: Re: [4XONTARIO] euro
Mary,
Your question has a simple answer but for this trader a very long explanation. Sorry.
Technically the EurUsd reached "a" top on its daily chart. The EurUsd found a top and "dropped" as it goes. To the uninformed trader this might be somewhat frightening after experiencing such a long trending move up. The trick for this trader is in finding the correct path to the understanding price and wave theory. Also knowing that when price trends there eventually needs to be a rebalancing period in which the market returns to stable position. The drop of the EurUsd was foretold in several signals. Let me explain…
First, in the following example (the daily price chart included) we see how price moved to a median line on an Andrews Fork (this happens 50% of the time.) An understanding of fork theory helps. The chart also includes a MACd oscillator simply to show the very obvious divergences talked about later.
Secondly, understanding price structure and wave theory is most helpful. Have you ever wondered why during a price move or trend, how price retraces to some greater degrees than others? How about, "why does price move a greater distance sometimes and not so other times?"
Well, this trader has looked at a lot of trading styles and has come to the conclusion that most methods are simply trying to "pinch some pips" on a familiar constant signal. The risk /reward ratio at which this is done is only measured by the individual trader. I like many have experienced many different methods of trading.
My experience has not been unlike others on this board as I have bounced as many different ways as the markets. Sacrificing many hours, days, weeks, years in just getting educated in what I consider a most wonderful journey, I finally came to the conclusion that the markets are not random but had some order.
One day while processing a simple question like, "What happened to the EurUsd..?" A vision stuck in my head of some price patterns and why did some have some order and others a much larger retrace pattern. Rather than reinventing the wheel I remembered a theory about a guy who perhaps had similar questions to mine. (Maybe not!)
I remember having trading friends saying you need to look at this theory. You have to understand Mary, that I am a quick learner and looking at Elliot Wave five to seven years ago was way too complicated. I really believe it was my brain telling me I was not ready and did not have the back ground to attack such a difficult subject without some "street" experience. So the years passed and I have progressively fine tuned what works for me. Then that question came, "What the heck is the EurUsd doing>>>?"
I then remembered the story I read about a guy who in the 1920's and 1930's, chronically ill with Chaga's disease and away from his accounting work, developed a price wave theory. Astoundingly not even being a trader but just a very good accountant.
I dove back into Elliot Wave. So, not such a random market but a market that is has its own language. While I have spent a lot of time in different theories and grasping, "what is next?" question at every turn, I picked up a book purchased years before and began my journey into information that I thought would explain the answers to the very simple questions that took so long to germinate. By not forcing the information at an early stage of learning I personally save myself from a whole lot of frustration and struggling. A great analogy is to pick up a fine piece if literature written in a language you do not understand and having to look up ever word and then trying to figure out sentence structure.
I lived the days, weeks and years into the position where time brought Elliot wave back to me. Now let me make this clear. I am not an expert in Elliot Wave Theory and I do not personally know anyone who is. What I do know is that order has been brought into the universe for this trader. So…
…the daily EurUsd chart is labeled with a top of the wave 3, the bottom of the 4th wave and finally the top of wave 5. Using an oscillator or "other" indicator one is able to pick up divergences and see the turn in the impulse waves of Elliot.(see MACd used on this chart.) One reason I had not used Elliot Wave Theory previously as the identification of wave placement or approximation were anyone's guess. Even with Elliot's rules it was always a crap shoot. So getting help was in order. Some use MACd and others Stochcastic, RSI, etc or a combination of the above to identify waves. With waves there come rules. Knowing what is supposed to fit where is very helpful, but that is intuitive. The rules are on the net or in the books. One simple rule that made it easy to identify wave 3 was the abc retracement to wave 4 that MUST take place. This is why wave 3 extends so far many times. Also look for the oscillator to be above that purple line in the
case of the euro….and on and on…
So simply, the impulse, motive or trending wave is composed of 5 waves and the top is of course number 5. If you look at your daily chart you will see the divergence that is very clear at the top of wave 5. (See the large white uneven rectangle. The lower signal is at the top of wave 3. Place your oscillator, etc to visually see the divergence. Most folks look for the divergence in the approximation of the current price structure. A big mistake as this could be terminal for a great trade as price eventually continues with the trend. Multiple divergences are keys to understanding where price approximates the wave pattern.
Now a savvy trader needs to understand that when price trends; price will eventually need to rebalance. When price is getting close to a top or bottom the divergence's starts to creep in. Now in the turns where you do not see divergence price is simply snaking along its way following the rules of human behavior.
Knowing that this is getting lengthy I will attempt to end this by telling you that I am looking for and abc pattern off the top of this euro. We have not reached the bottom of the a wave yet. The b wave would be lower than the high at 5 and then the c wave would terminate below the bottom of the a wave. Look for the signal the oscillator gives when the c waves terminates. The other possibility is for the 5th wave is to extend. The monthly chart calls for higher highs in price. This is a long time off…or is it? My current target short is the lower median line parallel at 1.3995. Adjustments will come with the live market.
Ok Mary…off to the rest of my weekend. Hope this is not to confusing…
Peter
--- On Fri, 5/13/11, Mary <mmburton02@aol.com> wrote:
From: Mary <mmburton02@aol.com>
Subject: [4XONTARIO] euro
To: 4XONTARIO@yahoogroups.com
Date: Friday, May 13, 2011, 11:22 AM
What in the world is going on with the euro? Mary
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