Wedges

[tradingwizzard 10]

Every trader knows what a wedge is and what it means: rising wedges are falling and falling wedges are rising. I agree, but to some extent though.

 

Ending diagonals or terminal impulsed in the Elliott waves theory are patterns that form a wedge and a classical wedge is formed out of five different waves and there are some rules to be respected or that should be taken into consideration when looking at a wedge.

 

Here they are:

- wedges always travel between the 1-3 and 2-4 trendlines;

- by the time the 2-4 trendline is broken, there is a strong tendency for it to be retested, but this is not mandatory;

- most of the times price has the tendency to retrace 50% of the whole wedge pricewise, in less than the 50% of the time taken for the wedge to form;

- wedges are NOT reversal patterns: there is a particular situation, called a running variation of a contracting triangle in which waveb>wave a and wave d>wave c and this is looking like a rising wedge. However, this one is not going to break to the downside (in the case of a rising wedge) or to the upside (in the case of a falling wedge), but virtually explode higher/lower, acting like a continuation pattern, with the thrust of the triangle being minimum 161.8% out of the longest wave (usually the b wave).

 

Attached you have a possible rising wedge we have on the eurjpy currency pair now and looking to see if this one is breaking lower. Probably yes, in this case we're having a rising wedge in the form of a terminal impulsive move for the fifth wave to the upside.

Edited October 28, 2013 by tradingwizzard
wrong count

[tradingwizzard 10]

Hi wiz.

 

Help me decide...i'm torn Normally of course i'd wade in regardless of what you want but right now..i dunno,i'm not normally this undecisive...

 

Should I politely ignore you or alternatively ask you a few questions which,based on past experience,i know will irritate the hell outta you?

 

 

Don't you just looove multiple choice problems...I mean markets?

 

shoot.................

TW

[tradingwizzard 10]

in the middle of your chart you have waves 1 2 4 3 5...5 being a L/H....

Let's start there...

 

To me it looks like 1 2 3 4 5 ending on the high followed by 1 2 3 correction...

 

the 4th purple should be one swing higher....my mistake there, sorry.

 

a third wave must be an impulsive wave ....always!

 

in order for it to be impulsive, at least one wave needs to be extended = 161.8% out of the next longest wave.....

 

to respect that, it means the fifth wave should be a failure (5<4) (purple)

 

rule of equality states a fifth wave failure implies most of the times the length of the fifth wave should tend towards equality with the first wave (talking about the purple count here)

 

Ok?

TW

[tradingwizzard 10]

I edited the chart now with the right 4 purple for everybody to see

TW

[tradingwizzard 10]

I figured that you misplaced the 4 but that still looks like rule based bias to place w5 where it is- in the middle of an obvious (to me) corrective wave. 5 waves up 3 waves down-I would have thought any EW'er would be happy with that)

 

see, this is exactly why people fail when trading with Elliott, because they simply do not understand or do not apply correct the principle....I was expecting more from you, but since you said previously you're not really into it I will explain here, no problem....and I would appreciate to leave irony beside

 

the fifth wave purple there fails to take the highs because it is the only scenario left when counting the 3rd wave green...if you would have put the fourth purple where 4 green is now and the fifth purple on the next higher swing, then it may look ok for the majority of people, but that structure is not impulsive...and it is MANDATORY for a third wave (in this case third wave green) to be impulsive....it is not impulsive because, like mentioned on the previous post, at least one wave needs to extend more that 161.8% out of the next longest wave....in this case the fifth purple would be bigger than the 1st purple, hence the 3rd purple should be bigger than 161.8% when compared with the fifth purple.....and it isn't, hence the correct count is the one presented as in this way all the rules are respected

 

can we move to the actual wedge or still some unclarities? just ask

 

TW

[tradingwizzard 10]

"If Elliott found 7 waves up and 4 waves down would you be just as determined to confirm that?"

 

this is the question you want me to answer?

 

call me stupid, but I don't understand what you mean

 

TW

[tradingwizzard 10]

Ok,let's try a different angle.Elliott Wave is a flawed theory,yes or no?

 

so we're not on trial you say....interesting

 

I would say yes and no...not kidding......if you want I will expand my answer

 

TW

[tradingwizzard 10]

Yes it's flawed,no it isn't flawed? So it's flawed but that's irrelevant due to the way TW applies it?

 

ok ok ....I see your point.....

 

how about my thread Live trading the currency markets....

 

since July till now I am up around 1000 pips......and I trade Elliott......is this flaw?

 

TW

[tradingwizzard 10]

That's nothing.Oilfxpro is a billionaire.Leaving aside the fact that making a 1000 pips and keeping a 1000 pips are 2 parts of the same job... I think you're dodging the point here which is fine but not helpful.

So are you saying that if Elliott had not written the book you could not make a 1000 pips?

 

Here are some "facts" you stated:

 

 

Every trader knows what a wedge is and what it means:

 

I disagree.I know at least one trader who doesn't have a clue.

 

: rising wedges are falling and falling wedges are rising.

 

Gonna have to guess what you mean by that..... It almost sounds like an Iron Maiden lyric.Do you mean Rising W's lead to falling prices and falling W's lead to rising prices?

 

wedges always travel between the 1-3 and 2-4 trendlines;

Except if your wave count differs to mine...

 

by the time the 2-4 trendline is broken, there is a strong tendency for it to be retested, but this is not mandatory

 

Except if your count/trendline differs to mine.

 

 

I would say that if we are going to trade using a flawed theory,then why not use a simple one rather than a complex one.? That is for me the key point to the whole debate here.

 

 

 

a third wave must be an impulsive wave ....always!

 

You once said no 2 EW analysts can produce the same wave count..So how do I know what is a 3rd wave.And why must it be impulsive..."always" ? By impulsive,do you mean does not overlap prev wave?

Why,in a theory you admit is flawed (and not flawed) must a rule be cast in stone?Why should I trust the rule,why should I have any confidence in it?

 

wedges are NOT reversal patterns

 

 

If every trader knows what a wedge is,then why the capitals?

 

 

I really consider your answer a joke, at least I hope it is...really now

 

TW

[tradingwizzard 10]

I would say that if we are going to trade using a flawed theory,then why not use a simple one rather than a complex one.? That is for me the key point to the whole debate here

 

You consider that statement a joke?

 

this thread is about wedges.....we started to talk about the wedge in eurjpy that shoud break lower....it did..or it is about to break the lower trendline.....let's move with Elliott on an Elliott thread

 

if interested...

 

TW

[tradingwizzard 10]

That's nothing.Oilfxpro is a billionaire.Leaving aside the fact that making a 1000 pips and keeping a 1000 pips are 2 parts of the same job... I think you're dodging the point here which is fine but not helpful.

So are you saying that if Elliott had not written the book you could not make a 1000 pips?

 

Here are some "facts" you stated:

 

 

Every trader knows what a wedge is and what it means:

 

I disagree.I know at least one trader who doesn't have a clue.

 

: rising wedges are falling and falling wedges are rising.

 

Gonna have to guess what you mean by that..... It almost sounds like an Iron Maiden lyric.Do you mean Rising W's lead to falling prices and falling W's lead to rising prices?

 

wedges always travel between the 1-3 and 2-4 trendlines;

Except if your wave count differs to mine...

 

by the time the 2-4 trendline is broken, there is a strong tendency for it to be retested, but this is not mandatory

 

Except if your count/trendline differs to mine.

 

 

I would say that if we are going to trade using a flawed theory,then why not use a simple one rather than a complex one.? That is for me the key point to the whole debate here.

 

 

 

a third wave must be an impulsive wave ....always!

 

You once said no 2 EW analysts can produce the same wave count..So how do I know what is a 3rd wave.And why must it be impulsive..."always" ? By impulsive,do you mean does not overlap prev wave?

Why,in a theory you admit is flawed (and not flawed) must a rule be cast in stone?Why should I trust the rule,why should I have any confidence in it?

 

wedges are NOT reversal patterns

 

 

If every trader knows what a wedge is,then why the capitals?

 

 

it is easy to find flaws in something one don't understand

 

TW

[tradingwizzard 10]

One should always be cautious in assuming what you think someone else knows or doesn't know.

I'll tell you one thing we almost certainly have in common......but you'll have to let me know where you want that discussion to take place

 

 

The Clash - Should I Stay Or Should I Go - YouTube

 

only one thing? :crap:

 

TW

[tradingwizzard 10]

Well,today it looks like I been promoted...so we're now both wizards:roll eyes:

 

I have nothing to do with that promotion......if it were by my judgement, I would make a deal first .:deal:

 

TW

[tradingwizzard 10]

Deal?.I think we know what might be in your wish list,but..... I never have been a big fan of censorship.

 

This thread is about wedges....apparently

 

 

 

 

God I gotta eat something

[tradingwizzard 10]

Yeah,me too,and like a vulture,i'll be coming back to take a few more bites out of this rotting carcass of a concept.Strictly in the interests of academic debate you understand.

We can't let a flagship thread like this just wither due to complete lack of interest can we?

Given it's prominent position on the shelf here,we have to at least discover the true hidden reason why it's under "introduction to technolobotomal anal-itics" instead of with the rest of the bog standard 5 star threads downtown.

One reason...the only one offered so far,is that we're not worthy.we're not worthy.Because what? it's beyond our understanding.

So the logic must be,and it's pretty universal,in order to criticise(anything) one first needs to become an expert in the subject..or as wiz prefers,a wizzard.

 

Well,i think war is bad...i'm not a Field Marshal:roll eyes:,i just want to make that perfectly clear for those who,in the past may have overestimated my numerous achievments.

 

There again,i don't like watching people starving and there's a debate i'd like to have with banksters,politicians and a few academics...but according to wiz's logic I don't get the right to the Glengarry Glenross leads...that debate is strictly for closers

 

I think it's immoral,albeit within the law, to hide money offshore instead of paying some tax.I'm not an accountant wiz,got that?

 

But let's stick to TA since I've established where the benchmark is in regard to pointing out flaws in TA - i'm well above the benchmark,as are most here,since we use it ourselves.So if a wedge isn't 1 std dv from a French fry i'd like the person who presented it to be more forthcoming and less grumpy.

Otherwise,if I ain't gonna learn something here i'm going to have to question why this thread is pretending to be a sticky on something relevant,let alone important.

 

ok Mr from beyond.......

it is appearing under the Introduction to Technical Analysis with the explications being given at the begining of the Forum lead there, so not much to say.....the purpose is to lay the basics of specific patterns that are appearing on the markets, and then, by the time one is identified, should be posted here for all to discuss.......are the rules respected, is it a wedge, if yes, what kind, if no, why not, etc......this way everybody learns from other's perspective, and analysis a present pattern........

 

so I posted one, waiting for you to post one for discussion, since you cut the chase for bleeding........or anyone interested in a nice technical analysis discussion on this pattern........the same with head and shoulders, and triangles that we have there on Introduction to Technical Analsyis

 

TW

[zdo 20]

The diagonal.

 

You can apply these methods across any market and any time frame.

 

There are two major types of Elliott wave structures -- motive and corrective. Within these two categories, motive waves include impulse waves and ending diagonals. Zigzags, flats and triangles are all corrective wave patterns.

 

An ending diagonal is an easily discernible wave pattern because it looks like a rising (or falling) wedge. Specifically, it is a five-wave overlapping pattern wherein each wave subdivides into three smaller waves. Also, trendlines connecting the extremes of waves one and three, and two and four, often converge.

 

Ending diagonals can form only in the fifth wave position of an impulse wave or the wave C position of an A-B-C formation.

 

Price behavior following an ending diagonal is quite impressive because it tends to be swift, retracing the entire length of the pattern.

 

The guideline covering the resolution of an ending diagonal tells us that it will be more than fully retraced in one-third to one-half the time it takes the pattern to form...

Because no links / references are allowed on TL, this content was blatantly plagiarized from some hard working Elliott Wave worker

[tradingwizzard 10]

The diagonal.

 

You can apply these methods across any market and any time frame.

 

There are two major types of Elliott wave structures -- motive and corrective. Within these two categories, motive waves include impulse waves and ending diagonals. Zigzags, flats and triangles are all corrective wave patterns.

 

An ending diagonal is an easily discernible wave pattern because it looks like a rising (or falling) wedge. Specifically, it is a five-wave overlapping pattern wherein each wave subdivides into three smaller waves. Also, trendlines connecting the extremes of waves one and three, and two and four, often converge.

 

Ending diagonals can form only in the fifth wave position of an impulse wave or the wave C position of an A-B-C formation.

 

Price behavior following an ending diagonal is quite impressive because it tends to be swift, retracing the entire length of the pattern.

 

The guideline covering the resolution of an ending diagonal tells us that it will be more than fully retraced in one-third to one-half the time it takes the pattern to form...

Because no links / references are allowed on TL, this content was blatantly plagiarized from some hard working Elliott Wave worker

 

it is always best to use your own words than links........it shows you understand what you're saying

 

TW

[tradingwizzard 10]

You've been reading too much zdo recently.Still,i agree your explanations are mostly complications hence explications is about right.

 

Now would you agree that a 5 min chart is an edge in itself when compared to a daily chart?

 

answer to the 5 min chart question:

 

yes, but.......

 

and after the but it depends on how you continue.......

 

TW

[tradingwizzard 10]

...or,in your case,if you continue...

 

I was thinking more along the lines of......

no,but.....

and after the but it depends on whether I can be bothered to explain myself...........:sleep:

 

Will the last person to leave this thread please turn the lights out?...thanks in advance

 

ok ok, fair enough

 

let's hear the explanation

 

TW

[tradingwizzard 10]

Yes,i agree,let's hear it....

 

 

"yes, but.......

 

and after the but it depends on how you continue......."

 

Please continue...

 

ok mits, it is clear you are not interested in a serious discussion on the theme of the thread so let's leave it like this

 

TW

[tradingwizzard 10]

so clear we can talk about anything else (French fries for example on such a thread but not the actual theme...man:(

 

TW

[tradingwizzard 10]

the wedge in the attachment is the classical example of a rising wedge that is.....NOT falling........but continuing higher.....this is called a running variation of a contracting triangle and it is the only exception when wedges do not act like the majority of traders expect them to.......threrefore, margin calls are being triggered on such patterns

 

classical example on recent eurjpy move

 

TW