I have gone short again with 1x this time with a maximum loss of around 4.5% and a target profit of around 8%.
I ended up taking a tiny profit after yesterdays trade as the market did not break down as low as I wanted.
I think we have now finished the upward trend and it will break lower from here.
Why will we break lower?
1) Wave (iii) was almost 2.618 x wave (i). When wave 3 is as extended as this, the 5th wave will usually end when it hits 1.618 x wave (i) (added onto the end of wave (iv)). The top of wave (v) is exactly the 1.618 extension of wave (i), so I think we have topped out.
2) We have confirmed the 3rd touch of the white downward sloping trendline as a resistance has already been confirmed by bearish reversal candles.
3) We are seeing bearish divergence on the 3,4, and 6 hour charts on RSI and MACD.
Issues with this trade?
1) The lower time frames (1h and 2h) only show bearish divergence on RSI and not on the MACD histogram.
2) Wave (v) has spanned over much longer than wave (i). However, I believe that this is due to wave (v) being extended.
3) Wave (v) appears to have 3 waves instead of 5. This seems inconsistent with Elliott Wave theory but I have seen many wave 5's ending with only 3 waves.
Over I think this is a solid trade and I have set a stop loss to get out if we do break higher.
Target levels?
1) 38k - 39k
2) 36k - 37k
All the best, and good luck!
I ended up taking a tiny profit after yesterdays trade as the market did not break down as low as I wanted.
I think we have now finished the upward trend and it will break lower from here.
Why will we break lower?
1) Wave (iii) was almost 2.618 x wave (i). When wave 3 is as extended as this, the 5th wave will usually end when it hits 1.618 x wave (i) (added onto the end of wave (iv)). The top of wave (v) is exactly the 1.618 extension of wave (i), so I think we have topped out.
2) We have confirmed the 3rd touch of the white downward sloping trendline as a resistance has already been confirmed by bearish reversal candles.
3) We are seeing bearish divergence on the 3,4, and 6 hour charts on RSI and MACD.
Issues with this trade?
1) The lower time frames (1h and 2h) only show bearish divergence on RSI and not on the MACD histogram.
2) Wave (v) has spanned over much longer than wave (i). However, I believe that this is due to wave (v) being extended.
3) Wave (v) appears to have 3 waves instead of 5. This seems inconsistent with Elliott Wave theory but I have seen many wave 5's ending with only 3 waves.
Over I think this is a solid trade and I have set a stop loss to get out if we do break higher.
Target levels?
1) 38k - 39k
2) 36k - 37k
All the best, and good luck!
Comment:
I have taken all my profit now. Turned out to be an easy trade to manage :)