Prophet.net
Now, if prices flatten out and start wobbling like January 11-19, we’ll have a very nice set-up for shorting. Always be wary of shorting a rise — wait for a break of the uptrend and a clean spot to set your stop, like the thrice-tested 1150 level in January. Perhaps 1108 will serve the same function, but it’s too early to tell — first prices need to drift out of their little channel.
Very funny juncture here, with a deeply oversold euro, but overbought AUD, CAD, stocks and commodities. The euro is still subject to the same forces as everything else, but its upside is muted and its downside is magnified. How will the situation resolve itself, with a melt-up in risk assets and little bounce in the euro, or a melt-down in the euro and reversal in everything else?
Mike,
As a novice to investing, I initially assumed that it was easier to forecast the long-term trend of the market than it would be to forecast the short-term. During this last 7-8 months, I have noticed that elliottwave experts have repeatedly been confident in their long-term forecasts only to find themselves needing to account for “alternate wave counts” that replace their initial preferred wave count. Now, I’m amazed that this stuff works at all, and it’s all very interesting from a theoretical position, but when you actually invest money based upon these long-term forecasts and find them changing again and again, well, that’s something else.
I notice that you have had success with short-term forecasts by using the very same elliottwave concepts and technical indicators that are used to predict the long-term trends. Do you find it “easier” to forecast the short-term than the long? If so, is there an explanation for why that might be the case?
Thanks
Bjorn,
Speaking for myself only, I find it easier to trade when the price is in an “impulse” wave. Corrective waves, on the other hand, admit many more variations in form, and therefore tend to require constant wave count revisions. During the past several months, stock indexes in the U.S were in a primary degree corrective wave (and so were many commodities), which was choppy and full of overlaps, and therefore difficult to trade on a monthly time scale. However, on shorter time frames, there were nonetheless trending periods which were tradeable. Perhaps that agrees with your observation. Now if indeed a primary degree impulsive decline has begun, I anticipate being able to hold (short!) positions longer term.
Remember that Elliott waves do not pretend to offer a crystal ball, and therefore trade only when price action has *confirmed* a wave count, and set your stops where price would invalidate the count. When applied in this manner, EWT does furnish a viable trading system.
GolfBoy,
Yes, your analysis does help to make sense of what I observed. Your comment, “. . . set your stops where price would invalidate the count” is an important point for me to take into account.
Thanks