Count-Based Analysis for 2H AUDUSD Trend Turn
This is an analysis of a current AUDUSD trend at the 2H time frame using a (non-Elliott) count-based framework. The framework is explained along with the reasons for expecting point 36 to be a probable turning point for the downtrend. A new automated counting tool is used and the objective basis for the count is described... For this analysis to be trade-able, wait for point 36 to form, and then for price to make a new low. When point 38 forms, place your stop loss 2 pips below the trend low (absolute endpoint of 37). At this time you can use an ATR tracker as a trailing stop or manually move your stop up as price allows. Please be advised that this analysis is based on the assumption of a 10/8/10/8 alternating prime count playing out to end the trend. However, a different variation of the prime values (10/8-4) could be playing out - for instance, the half prime count of 4 could be tacked on to the end of this sequence. Since the half prime can be further reduced (from 4) to 2, it is also possible that a 10+10+10+2 sequence has already ended the trend at point 32. In this analysis I'm simply saying that point 36 is the next likely turning point (and this is the area that I would trade at)...
Trade active:
Ended up extending a bit longer than expected... looks like we might've turned at 40 (which is 10+10+10+10 or 10+8+10+8+4 - a static high prime count or an alternating prime count with a half prime cap - however you want to look at it). I got in long at .62064 (stop initially @ .61682) and will be using a trailing ATR stop with 'lookback=1' and a multiplier of 1 (so my stop is currently at .62456)... so we'll see how it goes, but not a bad start to the trade... Notice that we had a 4+4 count occur after the final '6' callout - this is a different process than the primes, but to put it simply, this 4/4 corresponds to the red 4/4 at the beginning of the trend - these are types/anti-types... Anti-types are always appended to the 2/4/6 cycle (a process that excludes FCT terminals in its count) and repeats here 3 times.
Trade active:
Overnight price hit a high of .6347, a 140 pip gain from my entry point. I'm now using two ATR trailing stops, one w/ lookback=1 (aggressive) and the other w/ lookback=4 (conservative). I plan on using both depending on price action. Right now my stop is at .62593 which would be just over a 50 pip profit... Not sure of course what this new sequence will look like or what it's doing yet, but it's safe to say I think, that the trend has turned.
Trade closed: stop reached:
Stopped out at .62467 for a 41 pip gain. I used an ATR trailing stop w/ 'lookback=9' on this. Wish now that I'd choose the more aggressive ATR but a gain is a gain I suppose. I do like the idea of having a 'conservative' and 'aggressive' line plotted and being able to fluctuate between the two or use whichever applies. The rule of thumb probably would be to use the aggressive plot on high volatility... It seems high volatility in one direction is almost always followed by high volatility in the other...
Comment:
Re-visited: The count ended up being a static high prime (10-count) that repeated 4 times before bottoming out at .61702...