|
PureBytes Links
Trading Reference Links
|
Oct 16, 1998
Ref your message. I may sound absolute but that is due to the reason
that, contrary to popular belief, I do not think that the Wave
Principle is flexible. When analysing a wave, several rules have to
be applied and when these rules are broken, you discard the count.
I have certainly not discarded my overall count. The message you
quoted was dated Oct 9 and at that time we were presuming that the
2nd wave of the Vth was in formation. This 2nd wave had a maximum
retracement level and when it exceeded that level, it is not the 2nd
wave. That is the count I threw out when I subsequently told you
that I'm changing my count to the IVth wave still being in progress.
There is no reason to hold on to a count for a second longer than
necessary, when a rule gets broken. Just throw it out. There should
be no shame, no ego, no hurt pride. Throw it out.
The way I read the market today is that the C-wave downwards from
9367 completed at 7467 with the Vth wave failing. I have a small
problem in defining the Vth wave. To me, it appears that the Vth
wave is from 8182 to 7467. It is a diagonal triangle with the 3rd
wave being the extended wave. However, the 2nd and 4th waves do not
overlap. There are exceptions to the overlap rule and I think this
happens when the 3rd wave extends. 3rd wave extensions in a diagonal
triangle (especially when the diagonal triangle is a Vth wave - not
a C-wave) are rare occurrences. Usually the 1st wave will extend.
If not the 5th will extend. In both cases, the 2nd and 4th waves will
overlap. 3rd wave extensions are rare. I have to check the exception
to the overlap rule.
After checking, if I do label the Vth wave as a diagonal triangle
(expanding) what are the post-pattern implications?
1. Our current analysis is based on the reasoning that the fall from
9367 is a C-wave of an irregular failure pattern. The irregular
failure, when correcting an upward movement, is a weak corrective
pattern and implies market strength once the pattern is complete.
Let us label the degree of this A-B-C irregular failure pattern as
(x).
2. The C-wave of this pattern which began at 9367 and terminated at
7467 will therefore be of one lesser degree, i.e. (x) - 1. This
C-wave was a 5-wave pattern which terminated in a 5th wave
failure. A 5th wave failure when the 5-wave count is trending
downwards again signifies the inherent strength of the market.
3. The 5th wave of the C-wave is of one lesser degree, i.e. (x) - 2.
If this 5th wave is a diagonal triangle, the implication is again
that of a strong market.
If you now look at the pattern as a whole, you will see that as the
A-B-C irregular failure pattern completed, waves of consecutive
lesser degrees converged to further weaken the irregular failure
pattern.if my analysis is correct, the market could blow out
and start a genuine impulse move of a substantial degree.
|