ElWave BW and FX

It s always about probabilities not certainties.

Let's look at the hourly EURUSD chart that we have been following.

First of all the hourly big picture:

Our count may change a bit as the software deals with the wave four. It is always interesting to see the possibilities that the wave count presents but we want to trade as well. Using a breakout past the fractals works well as always.

Remember, if the count is confusing you are probably in a wave four of some degree.

http://www.elkvalleygold.com/Forex/F...0Nov2%20H1.jpg

Now the detail as we zoom in on the hourly chart:

There are some nice fractal breakouts here that I have been using to advantage. However, I do not want to get into the minute by minute waves and torture myself. ELWave is extremely good at pulling order out of the chaos of lower time frames. My thinking is why bother?

If I set out to paint my house I select a big paint brush not an tiny artist's paint brush. if the object of trading is to make money, then go for the easy money and the big money. Don't get trapped into a fascination with the minute by minute stuff.

You can paint a house with an artist's brush but that is insane. Maybe you can trade one minute charts but try using a bigger brush for bigger results. I can be an EW artist but I have been there and done that in OEX options and it makes you are a slave to your computer.

H1 (hourly) is as far as care to delve in to EW structure. I have been doing so here because I am trying to explain how I use the ELWave software, but daily is where it is at for me. I like the big brush for a big job.

Let's look at the Bill Williams approach on a daily chart after the detail is observed.

http://www.elkvalleygold.com/Forex/F...1%20detail.jpg


The Daily chart using the classical Bill Williams indicators:

How many 1 hour trades are there in this chart?

You have seen how I have used the H1 to get inside the daily waves and may even have played some of the H1 trades.

I use HI to verify where I am in the daily chart, I may even go smaller to verify the correct H1 count but ultimately I want to stay away from trading in the lower time frame.

Here is why:

I don't want to have to check my computer every hour or even every four hours to monitor my trades. I certainly don't want to check it every 5 minutes... though there are ways to get around that with some new trailing stop software I have been testing.

(Check the http://www.forexfactory.com/showthread.php?t=218567 thread on Forex factory.)

What I like to do is only have to check once a day.

Here are three trades that are all BW strategy. Together they took about three months and involved runs that totaled a bit over $25000 using one contract. Can you find enough trades that run $25000, trading one lot per time, in a 5 minute chart in those three months? Maybe. I don't care to make that much effort and tie myself to a terminal for all the hours required.

I eyeball the MT4 chart for the possible wave count and then run the same data through ElWave. When the EW counts match and my thinking is confirmed, then I watch the fractal that at will trigger a trade.

It is not very exciting. It requires patience. Acton junkies need not apply.

As you can see the AC has three green bars, The AO has turned green, there is a fractal waiting above the red alligaor line. The eyeball count suggest a fifth wave may occur if that fractal is taken out .

http://www.elkvalleygold.com/Forex/F...202%202010.gif

The last chart is the matching ElWave count. It is one of several counts that all end in the same pattern we are following. I selected it as it fits with the AO. Remember that it is compressed.

Fit it all together; Bill Williams, ELWave; the indicators the fractals and I have a buy stop in above that fractal. Its all about probabilities and that is as good as I can make it.

A special note. I am using data from IAMFX. Your broker data may look a bit different. I am also scaling my ElWave charts in linear format. I am not using semi-log scaling as MT4 does not offer that and I am trying keep confusion to a minimum. ELWave charts are compressed to make them fit on to the screen so they will look different from MT 4 charts

I appreciate the PMS that I have been getting and hope I have answered all the questions here. I also have decided on a signature. I hope it makes you chuckle.



http://www.elkvalleygold.com/Forex/F...%20Nov%202.jpg

Excellent information you have here Wab. Even though I understand how EW is suppose to work with BW's technique, I've always wanted to be a little more in depth with the Elliot Wave.

I'll be following with much interest.

Thanks Daerus.

It will get easier as we concentrate on the Euro and get in tune with it ... I hope.

Just to spice things up I thought I would show the EURUSD trade now in progress. Last time we were watching for a break on the daily fractal after trying to interpret the EW structure, the BW indicators and so on.

Here is how it has been working out:

http://www.elkvalleygold.com/Forex/F...0new%20bar.jpg


The Fibonacci 1.618 level that has already been hit, and turned the price back, was calculated by drawing a fib from i to ii.

I am looking at the AO and AC and the Alligator and thinking that the next fib level at 2.618 could still be up for grabs. I will exit in that vicinity if the price heads there.

I will watch the AO and the AC for any red bars that will alert me to look for a bearish divergence if /when that fib land mark comes into in sight. We have the map, but the map is only good if the items on it show up where they are supposed to.

Our analysis of the daily Elliott Wave and the application of Bill Williams strategy seems to be doing well.

You will note I have my stop closer than the Profitunity approach would suggest , I am using a 3 bar back plus two pips and moving it up at the end of each bar. At a future point I will discuss stop strategy.

This is trading in slow motion. Way to mellow for the 1 minute guys but so far we have only had to enter two buy stops and sit back and get on with our other activities.

I worked on my non-trading activities today and let Elliott take care of Forex in the interim. All in all, maybe 10 minutes on the computer, not including the time it took to write this.

Hi Wab,

On my monthly MT4 chart, it seems to me that wave (4) overlaps wave (1). It looks like based on your daily elwave chart that elwave has the same wave count.

What rules do you (or elwave) use in situations where wave 4 overlaps wave 1? I think there's a 10-15% rule (I'm not really familiar with it), but I believe that's a rare exception and not sure if it would apply to FX markets.

Any insight would be great.

p.s. I like your signature

If we get a diagonal triangle in wave five, then the forth wave can overlap.

There is some rule that allows for rare forth wave overlaps but I will have to research to be sure.

I know markets don't move in a straight line but I thought you said it was more likely to get to a 2.618 target than seen the recent pullback. Where did this weakness come from?

I have to join the others in thanking you for your clear explanations on this forum. It really makes me willing to learn how to fit together EW and BW methods.

I was expecting one higher move as well. It looks to me like we're probably now heading into a higher degree 4th wave (check the weekly chart).

I have a break of support. Looking to go short at that last down fractal.

Seems to me that we could have seen the top of primary wave 5 and now this is the start of a $ bull wave that could last for a few weeks. What does your analysis suggest?

Any ideas on where we are with this pair? Seems to me we are in primary wave 3 since the highs at the beginning of November but i'd be interested in people's views

It sure looked like wave 3 to me, but it's ended sort of early. If we are now in wave 4 (daily), we can start looking for the beginning of wave 5 anytime between where we are now, 1.3363, and around 1.3480 which is the bottom of wave 1.

Since waves 1 and 3 were similar in size, should we expect wave 5 to be shorter than those two?

Please take my "analysis" with a grain of salt; I am pretty new to EW counting.


Richard

This Strategy is interesting.

Its been a while since anyone's posted so here are two veiws of the Euro(Futures). One bearish and one bullish, at this point its a toss up but my bias is to the downside.

I'm bullish. Isn't it the highest point on the AO is 3 of 3?

Here ya go Unchained. The bullish version. From the last post the Euro still had to finish out 5th or C small wave down, bottoming with a BRB bar and turning up strongly. Still a lot of overlap in this pattern, wouldn't be suprised by a double top.Targeting 1.4500 now. 2nd chart shows how the minor pattern unfolded into the bottom.

I have been using Chaos for over a year now and have found it to be simple and fun. I have kind of cherry picked those entries that I like and use them as often as I can. One of these entries is the Wiseman 2, I was wondering if anyone interested in Chaos would find a benefit in putting a signal on the BW Wiseman-2 indicator so that it would message the trader when the signal occurred? I have consistently made an easy 25-35 pips on this 99% of the time it plots.

Is anyone interested in helping do this?

PMacBrian

Sorry I haven't been posting guys. Too much going on.

Regards a wise man three alert: You can do this yourself quite easily with Chin bars.

A daily trader wouldn't really need this as you only have to visually check the charts to see where you are once a day. If you are in a smaller time frame the Chin Bars are easy enough to set up on your fractal of choice.

I know that this is about Waves but can you look at this Statement and tell me what is wrong.. I have 1 loss in 12 trades.

Wrong?

I am not sure what you are asking me there PMac. Most people would kill for 11 out of 12 good trades.

Is is the one that lost or the take profit point that is bothering you?

The chart is a bit hard to see clearly.