Post 19 EWU Observations from a New Student

Jody,

I did a visualization of “myself riding the Wavy Tunnel to trading success…” and I didn’t want to control the visualization as much as allow my intuition to give me something useful. It was interesting because it turned out not to be a visualization of entering trades and feeling good about making money. It was totally about organization. I literally visualized myself organizing my work. I find that funny.

I realized from the visualization that the Harmonics are the starting point for me. I had thought they were an afterthought, but now I recognize that for the type of trading I want to do, they are at the top of the analysis hierarchy. So, I have been spending my time looking for Gartleys and Butterflys. (I’ll work on Crabs and Bats next week).

I’m mostly looking for Gartleys on the 1-day or 1-week time frame, but I did find a Gartley on the 15-minute. It’s not ideal, but does look like a Gartley. So, I went out to the weekly where I see a clear 5 waves up followed by a Flat Correction that appears to have ended. The Gartley is actually waves 1 and 2 off of the bottom of the Flat. So, I drilled down to the 2-day and the Flat is clearly a 3-3-5 with great symmetry. Plus there is a Red and Blue bungee Stretchaway off the bottom of wave C with a Failed Snapback as we completed the Gartley.

So, then I went down to the 4-hour because I want to see what that C of 2 looks like under a microscope. I see a 4th wave that came back to the tunnel with CAO divergence and great fibs between the waves. After wave C ended price rose in a PW/FG and then pulled back again as part of the Gartley. Now, down to the 1-hour and I see 5-up and 3-down off the low of C (again, this is the Gartley).

So, now down to the 5-minute and I see bar divergence on what appears to be a PW. Now, I’d prefer to see true divergence, so there may be a little more chop needed before prices take off, but I feel certain that we are very near the low.

I used the Harmonics to tell me I have a trade worth taking. I used Elliott and Fibs to tell me where I am on the market map and confirm the Harmonics. I used the Bungee to give myself confirmation of a probable change of trend. And now, I’ll use the Wavy Tunnel to plan my attack. Even if we get an X wave, I expect the price to go from 7.80 to 11.00 over the next 6 months. If the 5-minute can break through the Tunnel in a BO-1, I’m willing to take a standard risk trade with a stop below the X of the Gartley (which is wave C of 2 down). That’s going to be a pretty good sized position that I want to manage on the hourly as quickly as possible. I could be trading this stock long on pullbacks for months.

But that’s not the only setup. I have another stock setting up and yet another needing to complete a 5th wave before it sets up. All are annotated with screen shots on 6 different time frames.

I get it, I get what I need to do. I have to trade the larger time frames because my day is too full of interruption now that the new year has started. It is probably for the best. I can learn to develop my analysis and trading skills without being in a hurry. All of the analysis is done while the market is closed.

I still have a lot to learn, especially about staying disciplined. I use index cards to write my execution instructions and I actually wrote a bigger risk than I’m allowed on the one stock and I had to erase it and tell myself, “you don’t do that!” Part of me thought I was going to get away with something. Little things matter. If I can break any rule, I can break them all. I have to learn to be patient and answer to myself.

Now, instead of practicing just the tiny pieces of the Wavy Tunnel Plus by themselves, I’m practicing using everything I’ve learned all at once. That’s why I’m going back through the videos to see where I’m weak. But I have to say that I believe I can build a strong case for a trade or a case that it’s time is not yet ready.

Now, let’s see how I do!

-dave

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