Do D-Waves nest? This will be a particular focus of my studies going forward. Take the yearly DJIA chart briefly discussed in part 1 of this series. D2 ended at the 1974 low. On the Quarterly chart we can start a D-wave sequence there since it is a 21 quarter low. We then get (Quarterly chart): D1: 1976.3 high (1976.3 means quarter 3 in 1976); D2: 1980.1 low; D3: 2000.1 high; D4: 2002.4 low; D5: 2007.4 high; DA: 2009.1 low. The quarterly cash SP500 chart (from 1983) is attached to help visualize this sequence.
The point I want to make is that a Quarterly five wave sequence is currently shown complete at the 2007 high. Recall that the yearly chart is awaiting D3 completion. Can we make the assumption that it completed at the 2007 high since a complete quarterly chart sequence 'nested' in the yearly wave 3 position? Such an assumption would; at the very least, suggest that one pay particular attention to signs of exhaustion at the 2007 high using other techniques. I will do that in the next posting of this series. Another question raised: Does a higher level 'impulse' wave (D1, D3, and D5) always contain five waves at the next lower level?
To Be Continued ....
2 comments:
Saxby, I hope I'm not spoiling the ending for you, but I've been using D Wave down at the lower trading levels for about 2 years now -- and yes, the waves do nest as I suspect you are already surmising. The problem with these intraday time levels is that the ratios change with just enough frequency, usually at some kind of turn, that you can never fully trust them.
For example a 30 min (5 wave), 1 or 2 hour (3 wave), daily (1 wave) is probably the most frequent ratio. But quickly enough that ratio will change and the 30 min will suddenly become a 3 wave and the 15 min a 5 wave and the hourly synchronizes with the daily on the next move. As I suggested earlier, the amplitudes will change on you.
I suspect you won't see this at the higher levels where you are starting out because I imagine any such changes would occur much more slowly there. But I thought I would mention all of this so that If one of these days the 15 minute does not nest as you expect you won't be blindsided.
But I've never attended to the higher time frames with this, so I'm following this with great interest. Thanks for your very good and thorough work.
Wallfly. Yes that is one of the topics I am interested in! Thanks for the info. At the very least it is nice to have confirmation (replication) of one's conclusions.
Sax
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