Ray Barros Method Introduction

[gassah 10]

Hi Rob:

Yes, I am interested to know about running corrections. I saw this term in Ray's Blog, but could not find in the book. Thought I slept through a chapter....

How do we go about doing the explanation from Ray's webinar?

 

I’m using the Nasdaq 8/09 as an example. Take the 38.2, 50, 61.8% fibos between AB and BC. Look for where there’s a confluence of zones. In this case I erased the top 38.2 and 50%. Take the lower 61.8% and change it to 67%. After you buy a bull bar off these levels place the stop below the 67%.

 

The RC can be thought of as a sideways correction that is too strong to make it closer to B and should lead to a strong impulse move. It’s stronger than a single line, zig-zag or sideways correction, and not as strong as an irregular correction or R0.

 

 

[dandelion 10]

Hi Rob:

 

I redo the charts to make sure I understand you correctly.

I need to make a correction. CD does not need to come down to 78.6% of AB in order to label it a sideways market and to make changes to the ME. All it has to do is have a one bar acceptance below the PSZ of AB (like an upthrust). If it turns up to challenge C then I'd change the boundaries from AB to BC. It doesn't matter how it goes up.

Refer to pic5.jpg

 

What I said about changing the boundaries if it continues lower still applies.

Refer to pic6.jpg

 

If it comes down to 78.6% of BC but stays above the PSZ of AB then you just have a continuation of the uptrend.

Based on your Nasdaq 8/09 example, CD comes down to 78.6% of BC but actually went below PSZ of AB instead of staying above as mentioned in your requirements for a continuation of uptrend. Did you meant "staying above PBZ of AB" instead?

Then this scenario would be similarly to that drawn in pic6.jpg, right?

 

Thank you.

[gassah 10]

I replied last week but I don't see the response now. Did I not? I stopped drinking a few weeks ago.

[gassah 10]

I'll try again. I asked Ray for assistance because sideways vs. corrective was throwing me a loop. Here's his response:

 

A sideways correction is one form of a complex correction.

 

Your question raises two issues:

 

1) when do we relabel a new extreme as being part of sideways structure? A: when the market retraces at least 78.6% of the boundaries of congestion.

 

2) when the market creates a new extreme (in your case when the market goes above (A) and returns to congestion, at what point do we say the BC leg is corrective and not impulsive? A: when the market accepts beyond the Primary Zone.

 

Note that the two conditions are not mutually exclusive - e.g. you can accept below the Primary Sell Zone (D) without reaching the 78.6% retracement. This would make the structure a Running Correction rather than an extended SW structure.

 

Hope this helps

 

ray