Saturday, March 28, 2009

A Look at Friday's Market Structure 03/28/09


I wasn't very focused yesterday. I also did not mark up the 620 tick chart as I usually do to better visualize throughout the day the market structure of trading activity.
You should always watch how the market reacts to 38 - 62% corrections of an Impulse Wave. The market will either trade through this zone to reverse the direction of the Impulse Wave or continue the trend of the Impulse Wave. Yesterday, the market continued the trend of the Impulse Wave created in the overnight market. However, we only got a 62% Extension (Swing Wave) of the Impulse Wave. For market symmetry, you like to see a 100% Extension n(Swing Wave). If the market gives you more than a 62% minor correction during the formation of the Swing Wave, you probably will not get the 100% correction, as happened yesterday afternoon. So we ended up with choppiness during the last part of yesterday's session.
Charles

3 comments:

  1. hi charles,

    what sources do you recommend on learning wave structure concerning fib retracements etc that you use?

    michael

    ReplyDelete
  2. Hi Michael,

    Of Course, there are a lot of free stuff on the web. I like Alan Farley's web site "hardrightedge" for some interesting articles on Swing Trading (http://www.hardrightedge.com/tw.htm).

    He has a few articles on Fibonacce:
    "Cracking the Fibonacce Code" - http://www.hardrightedge.com/wheel/hrevoodoo2.htm

    Five Fibonacci Tricks - http://www.hardrightedge.com/wheel/hrefibtricks.htm

    Derrik Hobbs wrote a good primer on Fibonacci trading "Fibonacci for the Active Trader" - http://www.amazon.com/Fibonacci-Active-Trader-Derrik-Hobbs/dp/0975551329/ref=sr_1_4?ie=UTF8&s=books&qid=1238406086&sr=1-4

    Carolyn Boroden is a more advanced study "Fibonacci Trading: How to Master the Time and Price Advantage" - http://www.amazon.com/Fibonacci-Trading-Master-Price-Advantage/dp/007149815X/ref=sr_1_1?ie=UTF8&s=books&qid=1238406448&sr=1-1

    Tony Plummer was the first to describe the market trading in a three wave formation:

    The Initial Impulse Wave
    The Retracement or Correction Wave (38 - 62% Pullbacks)
    The Swing Wave or extension of the Impulse Wave.

    Charles

    ReplyDelete
  3. Suri Duddella has also done some good work on trading patterns based on Fibonacci numbers. His book shows his entry , exit and stop points for each pattern - "Trade Chart Patterns Like the Pros" - http://www.surinotes.com/

    Charles

    ReplyDelete