Taking the analysis down one time frame, we see another potential five-wave move coming off the wave 'iv' high in early August. We note that there is not yet any divergence in the momentum indicator with weekly candles. Those working on faster time frames should use the weekly chart merely as context and should watch signals and price behaviour on faster charts. On the weekly chart we see a potential wave 'v' reaching down into the supports we've been watching at 124^27 and 122^22.Ĭounter-trend traders working mainly with a weekly chart might start using this area to fish for a good long entry near a low. Also, they should note that the charts now show complete, or nearly complete, five-wave structures on multiple time frames. It sounds so simple when we put it that way!īond traders who caught some of the rapid decline in recent months should congratulate themselves for riding a motive structure down into the current price area. The keys to trading with this approach are to get in the market near the start of a motive structure of whatever time frame or magnitude you like to work with, and then to get out near the end. It contains smaller sequences labelled as i-ii-iii-iv-v, -, and so on*. As you examine the charts below, going down to lower time frames, you can see a declining five-wave (i)-(ii)-(iii)-(iv)-(v) structure beginning at the March 2020 high. These motive structures can often be found nested one inside another, consistent with their fractal nature. Ideally that allows us to take advantage of the fractal nature of markets by looking for confirmation that the smaller structures are behaving as expected in the context of the larger structure of which they are a part.Ī favourite target for Elliott Wave traders is a series of five overlapping waves that moves price into a new zone. It can be useful to examine charts on a higher time frame first, before moving to the lower time frames where our trades actually happen. The "order of magnitude" of each structure is indicated by the punctuation and capitalization of the wave labels. Their work draws on Elliott Wave theory, a form of technical analysis that looks at long-term price patterns and investor psychology to forecast market trends and give traders useful insights.Īn Elliott Wave approach treats patterns in price action as fractal structures that obey certain rules and have additional tendencies. In their first article for CMC Markets, Kurt Hulse and Tom Pizzuti of Trading on the Mark highlight recent developments in US treasuries.
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