Thursday, July 16, 2009

Revised wave count + TA

I learned something today. Simplicity is sometimes the best way to see charts. Trendlines, moving averages, RSI, etc...

My mistake was focusing too much on Elliott Wave counts previously, deviating too much from the simple traditional way of identifying channels. Furthermore, my understanding of Elliott Waves is incomplete, leading to a mistaken analysis. The symmetrical triangle that was formed beforehand should have given ample warning. Fortunately, this wasn't an expensive lesson.

The main thing about wave counting is not about getting the correct waves, but more of getting the correct trend. It is said that if one put 10 EW gurus in the same room, it is possible to have 10 different wave counts. Waves can be wrong, which is why EW practitioners will have to recount, and re-forecast, when violations occur. This was the case for me.

The chart I have now contains my revised version of STI minor wave counts. This is a bullish count.

Currently, STI is at it's resistance of 2424. It has to break through this resistance soon so that (i) it is not a double top resistance, and (ii) it gives confirmation that it is indeed in intermediate (or major) C.

Expectation is that it will be bullish. MACD has just turned positive, while stochastics had turned positive a few days ago, something which I ignored because of my wrong counts.

Based on EW theory, a dip is expected. It might be a good idea to load on a subwave ii dip for the daring, to catch on and ride subwave iii higher up.

How it goes from tomorrow onwards is up to anyone to guess.

I have one more alternate wave count that is of a bearish nature. Instead of being in the initial stages of major C, we might instead be in the final stages of it. Will post it tomorrow, then observe where market action will be.

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