Pro for a short position
1. 61.8 Fibo price retracement off the June low.
2. 100% time extension of the April to June sell off - maximum time allowed for a correction.
3. A wave = C wave.
4. Counting B as a triangle, can only come in the 4th wave or a wave B.
5. Weekly overbought on the DTosc
6. Daily overbought on the DTosc
7. 3rd push on the Daily RSI.
8. Divergence on the 15 minute RSI.
9. Trendline resistance on the weekly RSI.
10. Channel resistance on the H & S trendline.
11. Overthrow on the correction channel.
12. Overlapping waves on 60 min charts.
13. The May sell off looks like a motive wave, the rise looks like a correcton.
Other - STU calling for a 3rd wave decline in the the indexes and a rise in the Dollar, either could trigger a sell off in copper. Both the dollar and euro are at Fibo resistance or support.
Cons for a short position
1. EWI is calling this a 5th wave rise, not a correction.
2. I don't like to see price acceleration in wave C.
3. Break of top channel could signal 3rd wave price action.
4. Indicators can stay over sold or over bought for a long time, as can divergences.
5. The May sell off can be counted as a correction or a impluse.
Trade idea - if all pro's listed above can't stop the price from increasing we will make a new high. So, long if the price is still rising past the 100% time extension date on Tuesday, short if the price rolls in an implusive manner.
8 comments:
Will post Copper trades in comment section.
Interesting assessment. I like it.
what would make you pull the trigger?
a 5 wave move down in a smaller time frame? what do you tend to use, 5 or 15 or greater?
over 3 years, now often are you in the market? futures only? any particular markets you like or dislike?
I tend to wait on a 5 down 3 up sequence on all short entries, opposite on long, usually on a 15 minute time frame. On this particular trade I will probably take a more aggressive stance since I would expect at least some sort of retreat in pricing allowing me to get a BE stop set for a no risk trade. If price powers through the barriers I would wait on some sort of correction. I never chase, that's where 90% of my losses have come from in the past.
I'm in the market about 20% of the time depending on how clear the EW's are. I like to get in, get out, get paid. Also, nothing can be as stressful as sitting on a short contract overnight with price limits that can be imposed to where you can't get out for days. I tried using EW on indivual stocks and didn' have any luck. The futures markets are very leveraged and therefore emotional making EW perfect for measuring that emotion.
Great post, and great trade idea. Thanks!
Questions: You mention that the time for correction will expire. What rule or guideline are you using for that? And which correction, the one in copper or the one in the stock market since the April high? And how are you counting this correction (if it turns out to be that), as a large wave 2 (as the bullish EWer's are counting the current SPX correction)?
One comment: SPX and copper generally move in tandem, and sometimes copper leads, right? The past 4 days have seen SPX move down while copper continues to move up. Maybe these divergences are all due to the price of the dollar, but it could be that copper is leading SPX here, right? if so, we would expect SPX to rally soon, probably on Monday. That, or copper should head south soon, probably on Monday or Tuesday as you have stated.
FWIW, for those who have no experience trading copper futures, DBB is a "base metals" ETF that includes copper, zinc, and aluminum. If you plot DBB and copper on the same chart and show percentage chage, you'll find that they move in tandem. Looks like DBB is slightly more volatile with a higher high in January and a lower low in June (compared to copper). I don't know if contango could be having an effect on this ETF as it does on some of the crude and nat gas etf's.
what is a BE stop?
prima - I learned timing from Robert Miner, you should pick up his book - High Probability Trading Strategies. What a difference it has made for me. In a nut shell, simple corrections take from 31.2 to 61.8% of the previous impluse to complete, 100% for complex corrections. Copper is at the 100% time period it took for the sell off on this coming Tuesday. The odds are, if it rises from there it's not a correction, it's an impulse. Adding the fibo time demensions are amazing for their accuracy sometimes. Copper shoud lead the decline, or advance, of the market as a whole.
BE is break even. Rule #1, don't lose money. Rule #2, remember rule #1.
Thanks, Repo!
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