Bears beware (warning: very technical)

ddd

Notes from ddd: Loren is from a private online group that I belong, and his EW study is second to none. By the way, Loren generally does not answer questions regarding his studies. So if you find his article facinating but have questions, read it again...




Yes, Prechter tells us we will have a correction, much lower Dow, when is the issue.  



The author points out the apparent failed upright H& S pattern.  Not every such pattern always results in lower price as noted by Pring.   EW theory per his comments suggests higher prices but is hardly worth more than a flip of a coin.  In either case he advocates a higher Dow.



I attach monthly DJIA30 with relevant comments.



Initially it is observed that the monthly price pattern does objectively trace most of an upright H&S price pattern.   Price is presently seeking the high of waves c and B and the right shoulder high.  This pattern has developed over a 20 plus year period and is therefore creditable.  In fact this pattern traces a perfect EW cycle thru the six wave of an eight wave complete EW pattern.  Price is presently searching for the high of Wave 7 (B), after which the eighth and final Wave 8 (C) will commence.



Use RSI and MACD together since they do not violate the rule against multicollinearity  of indicators.  RSI highest value circled in red identifies the high of wave 3.  MACD highest value identifies the high of extended wave 3.  The two indicators are highly accurate with respect to locating the high of Wave 3, and extended 3.  There is a CND between the wave 3 RSI high and extended 3 RSI lower value which is typical of an extension.  Extended Wave 3 identifies the LS high of the H&S price pattern.



Corrective Wave 4 is identified by both RSI and MACD lows.  Wave 5 is identified by an RSI and MACD CND.  The RSI and MACD patterns are perfectly tracing the first 6 EWs.



Corrective Wave A (impulse wave having 5 waves down) follows Wave 5 high.   Price has since traced corrective Waves a and b (three waves each).  Presently price is seeking/searching for the high of corrective wave c/ B and the high or the right shoulder of a very long H&S price pattern.  This wave has three waves and per Pesavento may be expected to minimally equal the distance from A low to wave a high added to the low of Wave b.   A vertical red line projects that high just above the previous Wave 5 high.  A Fibonacci expansion study in magenta identifies that higher level.  



Fibonacci retracement in blue notes the high of Wave a at 61.8, which is an important resistance level.  Price should ultimately break thru this resistance on its way to the next higher resistance at FE 61.8 and Fib retracement 78.6.  MACD is above its zero line and RSI traces above 50 suggesting higher price.  Price in the daily has currently formed a fractal low below Fib 61.8, suggesting an a, b, c correction down before price resumes its higher path to retest Fib. 61.8 again.



There are two relevant H&S patterns being traced currently.  Presently price is responding to the latest H&S an inverse which argues higher price.  In addition price is responding to a RPD also suggesting higher price.



Once price establishes Wave B high (right shoulder of a longer term H&S pattern) Corrective Wave C an impulse wave having 5 waves down will begin.  It is too early to predict the specific type of corrective wave pattern will complete Waves 7 (B) and 8 (C) of the EW cycle.



Comments;



I have circled RSI high at RSI Wave 3 high compared to the lower present RSI value also circled.  MACD values are also diverging between these two points which argue ultimate lower price.  When the high of the RS (Wave B) is established there will be a CND between this price point and RSI Wave 3 high.  The upright H&S price pattern is a tracing of the EW cycle.  This pattern is repeated in smaller time frames and is thus the reason we see this pattern in the longer time periods.  



Presently price is tracing a corrective 3 wave price pattern (a, b and c) higher.  This pattern will be observed in smaller time frames as well.  There will be corrections observed in the daily and 4 hour periods which may be used as entry long



Other indexes will follow the DJ30 higher.  Weakness in the Russell 2000 or NASDEQ will likely provide early warning of Wave B high.



Loren

terranmn

maopao

greenback

Kami

Thanks.

Bencat

tonghu

真的没看懂， 哪位大牛给个摘要呗

ppteam

I don't believe a bit

colderdown

回复 8# ppteam

I don't understand a bit. But thanks for posting.

kosh

It's very interesting to peek into his way of thinking. Thank you for sharing!

ppteam

I also notice this gentleman purposely used screen capture tool to capture his MT4 chart, instead of using 'save as picture' feature from MT4 file menu.
I think he really wants to hide his demo broker name.

lwjnbtx

真的没看懂， 哪位大牛给个摘要呗
tonghu 发表于 2010-10-19 22:53

ddd 说再多读几遍，我一遍都读不下来。

lehldk

老土，这个图看不懂，感受不到明天

mayoutu

来个世纪头肩顶，然后镜面对称般一路下跌，道指跌到100点，哈哈。

wsjboy

I don't understand, give up

ddd

With a few hints everyone can understand a bit.

- CND is somekind of "negative divergence"
- RPD is somekind of "positive divergence"

Using the RSI, MACD and their divergences to identify EW cycles is his specialty.

All you have to know from this study is that he thinks the market will be looking for the "c" point, which is the "B" point also the "RS" (right shoulder), somewhere above from here in the near future (see the chart).

And yes, he also thinks there will probably be a lengthy (about a year long is my guess) down turn after the market found the "B" point to reach the "C" much lower from here. And that will complete the current multi-decade EW cycle, and (drum rolls please) what's ahead will be a multi-decade bull market again. BE READY THEN, cos we may see the sixth digit in the Dow Junes in the process. Ok, Loren didn't really say that in his study and the last two sentences were only from my dreams.

ddd

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ddd

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ddd

sorry about the unintentional multiple posts.

gummykitty

看个结论，多谢ddd