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Chapter 16, Part V. Trading Elliot Waves. Page 5

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Commander in Pips: Ok, I added to your analysis a bit, if you don’t mind. You forgot about very important tool - oversold and overbought analysis. Take a look at chart #7 below and you will see how it important:


    Chart #7 | GBP/USD monthly – some add-ons
    [​IMG]

    All that I’ve added – blue wave lines. This is DiNapoli “Oscillator Predictor”. It shows levels of monthly oversold (lower border) and overbought (upper border). Here we can use simple Detrended Oscillator, by applying algorithm of calculation oversold and overbought levels, as we did in corresponding chapter, but here I want to save some space, so I used an indicator that shows particularly these levels. So, what it could tell us?

    1. Take a look at an area, where we want to enter short – this is not just Agreement. This is also the level of monthly overbought! The market hardly will pass through it without solid retracement. So, even if we will enter short, and occasionally become wrong – we will have enough time due overbought downward pullback to move our stop loss to breakeven.

    2. Now take a look at rectangle around the 1.35 area. See – this is level of monthly oversold and 0.618 Fib extension target from large ABC pattern (marked by dot line). This oversold is very close to low of the third wave. Hence, the 5th wave will develop on oversold and Truncation is possible.


    See – simple oversold/overbought analysis gives us more confidence with our entry point and potential target where to fix profit – 1.3560 area roughly.

    Pipruit: I can’t believe it. It looks like I have to be more careful with details to not loose money…​

    Commander in Pips: Yes, that’s it. But do not be frustrated too much – this will come with experience. Now, let’s take a look, how it will turn. May be we will be totally wrong, heh…



    P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer soon.



    Note: FPA ranks are earned in the battles against scam, not in the classroom.
     
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