This is what i am seeing on the hourly on the SPI (in this case Data is rpresented by the IGMarkets Australia 200 contract, the IG equiv of the SPI, figures may vary but price action (in my opinion) is basically the same as the SPI)
This particular trade plan is a BEARISH trade plan, based on the assumption that Price action, dating back to the High on 19th Jan is in a (as yet incomplete) 5 wave structure down.
It is also possible that rather than a 5 wave structure Price may be in a 3 wave structure... (supported by the fact that the second leg down (from Jan 27th) is very close to the first leg down in length...
But.. back to the BEARISH trade plan.
I am looking at price as being in a prtially completed 5 wave down scenario with price CURRENTLY in the larger scale wave 3, Possibly in wave 4 correction to that wave 3, possibly Still within that wave 3.
Looking at the structure of the most recent downleg... I find it relatively easy to convince my inner bear that again this CURRENT latest downleg is an as yet incomplet 5 wave structure, internal waves marked in little black letters. I am aware that I may be neglecting the first wave down from the 27th high as being wave 1... I am ignoring this as I have found my counts work better if I take the first wobbly bits as being a basing or topping pattern and do not include them in my counts... this may be wrong, my account will inform me in time just how wrong this is :) :)
Basically I am looking for places to short, trying to capitalise on my Beleif that we have more downside to go...
To find levels for potential places to short, I have placed a fib retracement of the entire current 3 wave drop and a fib retracement of the most recent downleg
So... running on the assumption that latest leg, incomplete 5, meaning current price is in wave 4, and my "stuff" tells me that a wave 4 has a high percentage of terminating (75% according to others research) around the 50 to 61.8% Fibonacci retracement levels.
This area is bounded by the dotted rectangle on Price, bottom of the rectangle = 50% retrace, top = 61.8% retrace.
if price gets in this area, and starts stalling, maybe gives me a lower high or some such, I will be looking for opportunities to open a position.
Aggressive stuff would also enable me to open a position bang on the 50% retrace mark (bottom of rectangle) and with price currently toying with this area that MAY be all she wrote... Lower timespans to see what price is doing here to provide a good entry is the go, but not about to go into that due to time constraints.
ASSUMING I am wrong (a very good assumption :) )...\
There are ifinite ways for me to be wrong but two arre standouts in my opinion regarding this trade plan.
First... Major Wave 3 HAS completed and we are in Major Wave 4...
If that is the case then as per the shorter timespan wave 4 stuff mentioned above, wave 4 Could retrace 50 to 61.8 percent of entire move from 19th of Jan which would give HIGHer levels than those mentioned of more current wave 4 conjecture...
again 61.8% of ENTIRE 3 wave move from 19ththrough to yesterday/lastnight's low gives the level shown by the tiny line segment above the red lettered 4 (if 3 below is correct) label on the chart. Interestingly, the 50% retrace level of this larger structure is almost EXACLTLy the same level 61.8 percent retrace of the Recent (from 19th) downleg.. Two little line segments at the top of the dotted rectangle represent these two levels.
Second ..., if this is a three wave move only, expectations are retrace back to highs n a little bit more, i will have missed that opportunity to go long because of my current bearish orientation. I'd suggest that if price makes it significantly past the Major 61.8Percent retrace, then this particular wrongness will be the one :)
So.. there is pretty much a 30 point range between where Price is now, and an upper limit for where I beleive shorts are a high potentila low risk trade.
If I get the opportunity to open a short position in this region, I will Initially Hide my stop a tad above the high of the 19th.
If the trade goes in my favour, I will manage it through lowering my stop, first to b/e n then beyond if I can get 20 points in my favour.
mmmm If I am wrong, I think I will survive... n am CERTAIN other opps will arrive on both long n short that I can try n plan to capture Before the little blighters run away from me again...
(20min delay)