43 replies to this topic

[PorkLoin]

Dougie:  I did not think motive waves appeared in triangles?

Hi fellow Doug -- you find quite a few fifth wave triangles, like an ascending wedge ending a larger bull move, and once in a while you'll get a first wave triangle. First wave triangles can have subwaves with five divisions, which sets them apart (the others have three). First wave triangles often look like a "blob."

Here, in the gold market since December, a triangle would be a corrective wave, leading to further upward action once it completes. From the low in February a triangle would also be corrective, leading to more decline when done.

Best,

Doug

[dougie]

What I meant was, that first wave down is lableed as an A: but it is clearly 5 waves down

[PorkLoin]

Dougie:  What I meant was, that first wave down is labeled as an A: but it is clearly 5 waves down

Okay -- no problem. Lots of basic ABC corrections have waves "A" and "C" being composed of 5 subwaves. 5-3-5 is very common (for an ABC). So is 3-3-5. In an ABC, the first and third waves are indeed motive or impulse waves -- they are in the direction of the larger trend (here, the entire ABC). After big bull moves, you sometimes see some wicked "C" waves to the downside. "C"s are third waves too, and they can be wonders to behold.

So, quite often one gets to a point where one sees five waves, then three waves in the other direction or sideways, then five more waves. Looking at the 5-3-5 we don't know for sure what's gonna happen. Might be a completed ABC, might only be 123 with more to come, and might be a more complex correction forming.

If gold had three waves down from Dec. to Feb, I'd be thinking a triangle is very likely. That five-wave decline is really what made me take notice.

Best,

Doug

[SilentOne]

Dougie

i did not think motive waves appeared in triangles?

They don't. Only 3s.

cheers,

john

Edited by SilentOne, 21 July 2005 - 06:20 PM.

[dougie]

Pork loin: I think we all agree then; if that was a fiver down, we can not be in a traingle .....

[SilentOne]

Doug,

If gold had three waves down from Dec. to Feb, I'd be thinking a triangle is very likely. That five-wave decline is really what made me take notice.

And thus why a triangle count for gold here is suspect. Anything is possible and I won't hang my hat on a particular ewave count.

One final point though. Commodities can make terrific runs from a 4th wave triangle. This is because the 5th wave extends, often rising at least a fib 1.62 times the sum of waves 1 + 3.

But a break of $415 would probably kill any triangle speculation.

http://bigcharts.mar...&mocktick=1.gif

Do you know why I don't think a triangle is in the making? Look at the MACD. It should be oscillating up and down during its formation. Instead it is just heading lower with time. Not good IMO.

cheers,

john

Edited by SilentOne, 21 July 2005 - 06:31 PM.

[PorkLoin]

Dougie:  >>Pork loin: I think we all agree then; if that was a fiver down, we can not be in a triangle<<

Yes, Dougie -- that should be the way it works out (although a triangle from the Feb. low is still in contention, IMO), and SilentOne makes a good point about the MACD -- the indicators here are really not supporting the triangle case well either.

But sometimes the prettiest, textbook-looking patterns don't work out, and that's why I also put in the triangle/continuation count. Back in the 1990s after a period of relative quiet and low prices, Silver made a nice five-wave move up, and many people got really excited. Well, the darn thing didn't work out worth a diddly, and it proved just another variation on the "bull trap."

Going with the bearish case in gold here, the decline from the June high to the July low looks pretty good for five waves too. If so, then we should be making a correction here - upwards or sideways from that July bottom, and then a good low-risk sell should be at hand.

Doug

[EagleTrader]

Dougie:  >>Pork loin: I think we all agree then; if that was a fiver down, we can not be in a triangle<<

Yes, Dougie -- that should be the way it works out (although a triangle from the Feb. low is still in contention, IMO), and SilentOne makes a good point about the MACD -- the indicators here are really not supporting the triangle case well either.

But sometimes the prettiest, textbook-looking patterns don't work out, and that's why I also put in the triangle/continuation count. Back in the 1990s after a period of relative quiet and low prices, Silver made a nice five-wave move up, and many people got really excited. Well, the darn thing didn't work out worth a diddly, and it proved just another variation on the "bull trap."

Going with the bearish case in gold here, the decline from the June high to the July low looks pretty good for five waves too. If so, then we should be making a correction here - upwards or sideways from that July bottom, and then a good low-risk sell should be at hand.

Doug



5 Down, then ABC, the (i) & now (ii) of the next 5. The ABC and the (i), (ii) often looks like a triangle (a traingle starting after the 5 down). Implications are similar, going down

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[PorkLoin]

EagleTrader:  5 Down, then ABC, the (i) & now (ii) of the next 5. The ABC and the (i), (ii) often looks like a triangle (a traingle starting after the 5 down). Implications are similar, going down 

Aye, Eagletrader. Corrective waves are, IMO, more of a pain in the butt, and my problem with the abc from the February low is the comparitively long time it took. It does happen that way, sometimes, and I wouldn't bet against the pattern on that basis alone -- it's likely just the market "keeping things interesting."

If it is indeed abc and (i) and (ii) since that Feb. low, then we're getting the triangle-like look you mentioned. With the further London trouble and the Chinese currency issues, for the market to make a head-fake higher here would be no surprise, very much like the "E" wave of a true triangle often is -- a thrust, many times a sharp thrust. Whipsaw City.

Gold is considered a good charting market, lots of volume, wide participation, etc. But I'm still wondering what trick is up its sleeve this time; could be something that's not been discussed, even by a bigmouth like me.

An ongoing tradeable bounce looks like the deal, and there were some good calls made by those who bought in the last week, at least those who are fairly nimble. Thus far the gold futures look like ABC or 123 up to me, from the July low.

Best,

Doug

[PorkLoin]

Still looks straightforward to me (too good, too "textbook"?) -- declining in five waves, rallying in three waves. If the June high gave way to a larger developing downtrend, then the ongoing three-wave corrective rally may stop at a Fibonacci retracement of the move down into July.

On Friday the December futures almost made it to a 50% retracement -- it'd be just less than $438. 61.8% is about $441, and 78.6% is roughly $445.

Going above $445 would make me really question the bearish analysis. Going above the June high kills this bearish count.

Doug