Egg On My Face But That's Alright
We've all been there before and we'll be there again. The place I'm referring to is a time when hours of technical analysis lay the foundation for trade set ups, only to have the market make you look silly. Well that's what happened yesterday.
Above is the chart that I used as my template for market action. At the time of yesterdays post, a nice decline began from resistance. A positive sign, yet my TP called for confirmation in five waves down before acting.
Here's an excerpt the original text from 6/6/2012 where I said,
"This count is part of my trade plan and is only a possible attempt to describe the markets position in real time. w.(c) = 1.618 w.(a), where w.(b) is a running flat. The overall interpretation is still subject to confirmation of five waves down before the possibility of making any trading decisions. Obviously breaks above 1300.75 negate."
Click
here to view the full text of yesterdays Trade Plan.
As the price shortly reversed and broke 1300.75 the opportunity for a short trade was gone. The massive rally that occurred throughout the day, is FED induced. More manipulation. Hope and Prayer! While this left egg on my face, my account incurred ZERO damage. That's why we have trade plans and trade what I see not what I think.
Here's my updated daily chart showing a completed five down. If I'm correct, price will rally in three waves then fall in five waves below 1262 low. At a minimum, the trade plan calls for a 5-3-5 move to the downside and that's if the move from 3/27/2012 top (1419.75) turns out to be corrective rather than a new trend down.
Dropping down to a 360 intraday chart, the move from w.1 low appears to be incomplete. As I view this chart, I see a small triangular shaped price pattern (found in 4th and b waves only and prior to a terminal move ). A thrust up should follow , which it has.
The minimal requirements have been met to complete the pattern as price exceeded 1314. However, my upside targets that I'm looking to possibly trade are where w.(v) = w.(i) at 1328.5 and where w.(v)= .618 {w.(i) - (iii)} at 1342.75. Also note that the previous 4th of one lesser degree ( 1334.25) is roughly the target for a measured move of w.a circle or the entire corrective move (w.2), which I think is a lower percentage play.
Laughingly, let's see if I have a better day.
Best of Trading
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