XEL

Divergence

www.dropbox.com/s/7vgbvnrsev4j2qv/Screen...%20at%2008.45.28.png

"For me the cut-off points are clear on this: a close above 107.75p and it should be a new uptrend; a new low below 91.71p and there'll be a 5 wave sequence down from 127p which, although it should give a bounce off the main trendline, would not bode well in the longer term."

Jackozy, any chance you could expand on what you mean 'would not bode well for the longer term'
If this a wave 5 down what are the implications.


Thanks

This has now made a new low below that wave 3 low so it looks to be forming a set of 5 waves down from the recent 127p top:



dl.dropboxusercontent.com/u/20815047/XELdaily17_05_13.gif

We'll have to look at the bigger picture to see whether this is likely to be a final move down or the first move of a longer series. For now, though, that trendline is looking quite good for a bounce (round about the 82p level) as there will need to be at least a correction after these 5 waves down.

One thing I would say on this is that until the low at 107.75p gets taken out there remains the possibility that this move up from 92p is a wave 4 up and not the start of a new trend.

So far it's been limited to almost exactly the 38% Fib of the drop from 124.69p which does suggest that this may be what's happening:



dl.dropboxusercontent.com/u/20815047/XELdaily10_05_13.gif

The form of that last rise to 127p seems to suggest that it wasn't an impulse wave too (just like GKP's move from 141p to 260p).

For me the cut-off points are clear on this: a close above 107.75p and it should be a new uptrend; a new low below 91.71p and there'll be a 5 wave sequence down from 127p which, although it should give a bounce off the main trendline, would not bode well in the longer term.

twl2009 wrote: Remo, viewed on a 4hr chart this looks very much like a 123 low breakout to me, but I will defer to your expertise.

I'm basing it on the daily.
Obviously different time frames will have a different result. I use the daily for my signals as I'm looking for a potential trend change .intra day charts like the hourly or 4 hour charts are used for short term trading so you will get the signals on there earlier but the real signal comes from the daily .
There's nothing wrong with shorter time frames trading
I like to see a clear 123 signal . You can use 1 candle to have the 1 and 2 points together but the problem I have with this is you get a lot more false signals. Also with a 123 low even when you get the signal the proper verification comes when the price moves above a significant near by high . That will verify the move.

Remo, viewed on a 4hr chart this looks very much like a 123 low breakout to me, but I will defer to your expertise.