Lloyds

Many thanks Diver. Definitely plenty to think about.

screencast.com/t/cQ83xKsbr5

Hi Amo,

Sorry to be so long getting back to you. Believe it or not I've tried three times to write this and each time been interrupted in some way so I'll keep this short and get it posted....




I can only generalise as far as EWT is concerned as my data doesn't go far enough back in time but, if you take a look at the long-term view per the chart you can clearly see the present move is but a tiny part of what appears to be a flat originating back in 2009. The move up from the low at 21.637 could be anything in wave terms but, for it to be a motive wave, bear in mind there has to be a deviation between waves 3 and 5 otherwise it is not a motive wave. Whatever it turns out to be it is nested and complicated and, in all honesty, not worth analysis. Much more significant is the fact the SP is currently slap-bang in the middle of the target area of the previous swing depicted by the 50 - 61.8 fibs. A move above 57.2 and this will be looking at the next significant resistance area between 79 and 83.25; a move below and this once more looks to the depths.

But how do we know that the 5 waves we are discussing are part of the larger degree Wave 1 up? Is it because it started at an all time low share price?

Hi Amo,

Anything's possible!

At some point there will have been a full series of 5 waves up and, according to EWT, they will form a wave 1 up of larger degree. Clearly then we'd expect a wave 2 down which ought to be at least 50% (most common case).

We can't work out the retrace levels until we know where the top is. It's possible it will return to those levels I guess. Nothing goes up in a straight line!

Jackozy,

So you still think Mid 40's is a possibility based on EWT even if we see 55.63 breached?

Thanks
Amo

Hi SRB,

Again, it's impossible to know for sure. A 38.2% retrace is comon for a wave 4 but not a requirement. When really bullish we sometimes see 23.6% or even less.

If it does go on to new highs before getting to the mid-40s then I'd look to see if there's a bearish RSI divergence at a resistance on the daily chart.

Quite often there will be such a divergence between the highs of waves 3 and 5.

If you can get in on or near a wave 2 low the best thing is just to let the trade run with the trend until you get a sell signal such as the above. Even if you miss selling near the top, there will usually be a second chance to sell when the SP forms a lower high on the way down (either wave 2 up of A down, b up of A down or simply the top of B up).

Best to not try and be too clever and stick with the trend. I know from personal experience!