FractalTrader

FractalTrader

Many seem to think every rally in IWM is a chance to sell. I actually agree with that, bigger picture, as the highs are in, in my opinion. Just be prepared that it could be a couple weeks, and 116 area, before the downtrend resumes. So if you were shorting at the lows, it might be risky to hold on here. SPY has another date with the highs, IMO.

FractalTrader

I show at least 3 scenarios here, that paints different pictures based on what the wave patterns allow. The move higher off 105.52 must be either a C or a 1, since it's a diagonal pattern. In general, I think one must be prepared for the simple ABC scenario longer term, and hence new lows, and look at the other scenarios only after some evidence that some kind...

FractalTrader

No fancy indicators here. Just good ol' fashioned highs and lows. Could a top be developing? Sure, but why risk short positions now, when there's no evidence of a trend change?

FractalTrader

This is a grid I put together showing different views of risk, or overall market health. I used renko bars for all the charts since really the overall trend is more important than any given day. - IWM/SPY - When investors are putting risk on, they favor small cap stocks over large cap stocks since better returns can be found there. When they become risk...

FractalTrader

After a multi-year decline in price, I think the underlying commodity has changed trend for at least the remainder of the year. A rest is needed here, though. Specifically a pullback to the price support at 33.41 is likely over the next couple months. After that I think coffee is likely to continue a developing wave 5 advance. I show that path in orange. I...

FractalTrader

Three distinct patterns of 5-wave moves (not all impulse) followed by 76.4% retracements. What does it mean? Either it's a rare formation called a type 2 diagonal consisting of 5-3-5-3-5, or more likely a series of 1's and 2's, setting up for a very steep wave 3 decline. A slightly more bullish possibility I didn't consider at first, ABC-X-AB, with a final C...

FractalTrader

There are lots of "IFs" associated with this, but the characteristics of momentum on 15m chart point to a likely 3rd wave. This count will be confirmed by another wave down, after a typical retrace to the prior wave 4 area. If another wave down does occur, creating a 5th wave, and if the entire structure off the high is then retraced 50% or more, then a nice...

FractalTrader

SPY,QQQ continued higher despite my original expectations going into Monday. Upon further analysis, what I originally (hastily) counted as a 5-Wave pattern off the low over the weekend, is actually an ABC in SPY with a diagonal C-Wave. With a diagonal, the pattern can only be an ABC corrective wave. The convergence of the lines points to a likely termination...

FractalTrader

On the hourly chart, SPY is showing 5 waves off the low. Additionally, the momentum of the rally off the Feb 5 low was very strong. The 4H chart shows the correction having completed 2 ABC zigzag patterns. The first rally was a short-covering rally. It was vicious and unforgiving. I think SPY continues to trade higher, but some profit taking is needed first....

FractalTrader

See chart notes. With two possibilities of equal probability, it's best to wait for the market to show its hand.

FractalTrader

Wont know for sure until the pattern is completed on a move below the proposed wave 1 high

FractalTrader

Just a visual as to how I'm managing a short swing trade. My vehicle is a 110/108 put debit spread expiring 2/14. I will assume a reversal above 113 for the purpose of this trade.

FractalTrader

UNG is in a wave 4, which means even though it hit my downside target, it could trade in a range before making a new extreme. This expectation needs to be baked into any position strategy. For example, if I go with an option on UNG...I should either go out to Feb22 monthly, or look at a weekly debit spread. In this case, I'd probably go with the naked monthly...

FractalTrader

2 days ago I posted about the longer term pattern in gold. I wanted to show what I'm seeing shorter term. When I see patterns develop, I generally wait for them to develop to maturity before jumping into a position. Otherwise, the pattern I think I see, could actually be complete rubbish. The chart here shows an example. -IF- this move up (a diagonal triangle)...

FractalTrader

An ABC correction could definitely be completed here, but until 5 waves up materializes on the lower time frames, I wouldn't write off this correction off the highs as over. Once 138.09 is exceeded to the upside, there will be confirmation of the final down wave completion. Again, one could try long prior to that, by looking for a five wave advance on lower...

FractalTrader

This is a dual forecast. Looking at UNG from an elliott wave perspective, it is carving out a 3-wave corrective pattern higher. This lends a high probability that multi-year lows are not yet in. As a reminder, a five wave pattern is needed to signify a new bull trend. I can find no way to count five waves since the 2012 low. To summarize, longer term (weeks to...

FractalTrader

I zoomed in view of my prior daily chart post, which shows the expected divergence in momentum before a pullback.

FractalTrader

Bonds have been running up in the new year, but it's time for a pullback.