ELLIOTT WAVE PATTERN

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Dynamic Trader Trading Course

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Dynamic Trader Trading Course

Dynamic Price Analysis Section

Table of Contents

End-of-Wave Price Projection Templates 1 Custom Price Projections 13

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Dynamic Price Analysis

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End-Of-Wave (EOW) Price Projections

The EOW (End-Of-Wave) price projection routine in Dynamic Trader allows the trader to quickly make all of the typical price projections for a given Elliott wave position. By using the EOW routine, the user does not have to make each individual projection, one at a time with the Fib-P routine.

The EOW routine requires a swing file on the chart. It is quick and easy to build and edit a swing file. When a projection is made, the EOW routine makes assumptions as to the wave position of the prior pivots. If the EOW-3 projection is made from a swing low, the EOW routine assumes the most recent swing down is a W.2 and the swing before a W.1. It will use these two swings to make the projections. If necessary, edit the swings so they have the form you assume is the most probable wave structure.

The EOW price projection routine assumes you have an opinion of the probable Elliott wave position of the market. This may not always be the case. When it is, the EOW routine often allows you to make all of the price projections you want more quickly than marking them off one at a time on the chart from the Fib-P projections. Another advantage of using the EOW projections is each projection on the chart is labeled according to the wave it is projecting.

The chart below assumes we believe Oct. 7 is a W.2 low. I usually choose the short-list projections from the EOW menu. Right clicking on the EOW label on the Fib-P menu chooses what projections will be used for each swing comparison. The projections for EOW-3 were made from the Oct. 7 low. The projections included where W.3 would equal 100% W.1, 162% W.1 and 262% W.2.

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3 The first signal that wheat may be in a W.3 is if wheat rallies above where W.3 = 100% APP W.1. Wheat did this in one wide range up-day signaling a W.3 was probably being made. Two price projections fell within less than one cent of each other – W.3 = 162% APP W.1 and 262% APP W.4. This zone would be a typical price target for W.3. If wheat reached this zone, the trader should be alert for signals wheat is making a minor W.3 high.

Wave-3 made a top just above this price zone as shown in the chart below. The next price analysis objective is to project the high probability target for W.4. The short-list EOW-4 price projections include where W.4 = 38.2% and 50% Ret. W.3, 38.2%, 50% and 61.8% Ret. W.1-3 and 100% APP of W.1. Those projections are shown on the chart below.

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Wave-4 should not decline below the high of W.3 so we should eliminate the 61.8% retracement of W.1-3 (374.0) from consideration. Four projections are grouped fairly close together. See the chart above. The ideal price zone to

complete a W.4 low would be 378.6-375.6. On Oct. 20, wheat made the W.4 low at 376.0, right within the ideal price zone.

Our next objective is to project the high probability price target for W.5. The short-list for the EOW-5 price projections include the three typical targets for a W.5 – W.5 = 100% APP W.1, 61.8% APP W.1-3 and 162% Ret. W.4. The projection is made from the W.4 pivot low and the EOW-5 projections are shown on the chart below.

W.1 was relatively short and the W.5 = 100% APP W.1 projection falls just above the W.3 high. The other two projections are grouped very close together at 389.5-390.4. Wheat trades in quarters and could not trade at 389.5, but Dynamic Trader will make the projections in eighths because the data vendor supplies the data in 1/8ths. Years ago grains traded in eighths.

The ideal price target for W.5 would be at 389.4-390.4. Wheat made a wide-range reversal day with a high at 391.4, just one cent above the ideal W.5 price projection zone.

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The Steps To Make An EOW Price Projection

1. Bring up a swing file on the chart or build a file just for the current purpose. If necessary, edit the file so the swing pivot highs and lows will be where you want them.

2. Right click on the EOW label in the Fib P menu. Choose which ratios you want to use for each wave comparison. In most cases, begin with the short-list ratios.

3. Click on the pivot low or high on the chart where you want the projections made from. Click again on the chart and the projections will be made and labeled on the chart.

4. The high probability support or resistance zones will be where several projections are grouped relatively close together. Every market, every time will not complete the wave at the exact price zone, but these price zones provide you with high probability targets and a frame work from where to develop trading strategies and make trading decisions.

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EOW-C Price Projections

The chart of bonds below shows the typical W.c price projections. Once bonds rallied above the W.a high, the W.c price projections may be made. Two sets of projections are made.

1. The retracements of the Jan. 12-Jan. 26 decline that is labeled Wave-A on the chart below. The EOW-2 label was chosen in the EOW routine. The EOW-2 only uses price retracements. It may be used in any circumstance when only retracements are to be made. While I have labeled the Jan. 6 low as a A, it may be a wave-1. It makes no difference what wave it is for our purposes. We simply want to make the price retracement projections from the Jan. 26 low so we choose the EOW-2 projections.

2. EOW-C projections are made from the Feb. 6 low. The short-list projections are where W.C = 100% and 162% APP W.A and 127% and 162% Ret. W.B.

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7 The 50% retracement falls below the high of W.A, so it is ignored. The 162% APP (W.C = 162% APP W.A) is far above the other projections, so it is also ignored for now. The 100% APP (W.C = 100% W.A) and 127% Ret. (W.C = 127% W.B) are only a few ticks apart and not far above the 61.8% retracement. The most typical price relationship between waves A and C is 100%. That is always the first place I look to see if other price projections fall nearby, especially one of the Fib retracements.

The most probable price zone for the W.c high should fall at 122.15-123.05 which includes the 61.8% retracement and where W.c = 100% APP W.1 and 127% Ret. W.b. How did it turn out?

Wave-c made a reversal day high right within the ideal price zone for the W.c high. It would be nice if all of the EOW price projections clustered within just a few ticks of each other. While this sometimes happens, more than likely the zone will be relative broad. In the bond case above, the ideal price zone for the W.c high was a 21-tick range (122.15-123.05). If the market rallies into a projected target zone, look for reversal signals and be alert to the smaller degree pattern and time position.

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Combining Multiple Degrees of Price Projections

The highest probability price targets are where the smaller degree price projections fall within the price target zone of the larger degree price projections. If the smaller degree price pattern is evident, we can make the price projections from the smaller degree to see if we can narrow the price range target of the larger degree

projection.

The bond chart below is a close-up of the same period as the charts above where we were projecting the price target for W.c. The swing file has been edited to show the smaller degree swings that make up W.c. A W.c should usually make a five-wave pattern. This appeared to be the case with bonds from the Feb. 6 low (W.b).

When a swing chart is built or edited in Dynamic Trader, each swing must be a minimum of one bar. You cannot edit a swing file to make one bar both a high and low. In some cases with very minor degree swings, one bar may be both a wave high and low when using daily data. Viewing only daily data, this was probably the case for the minor swings in bonds. The W.1 high bar was probably also the W.2 low bar. The same for W.3 and W.4. Why do we suspect this? The W.1 bar

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9 opened up, continued higher and closed below the open. The intraday data may show the highs and lows in a slightly different position, but if we are only using daily data and want to use the EOW routine to make projections, we have to edit the swing file as best as possible with the bars we have.

We have already made the W.c projections from the Feb. 6 low (W.b) as described in the commentary and charts in the previous section. The 61.8% retracement and W.c projections are shown on the chart above.

Also shown are the W.5:c projections made from the W.4:c low. These projections include where W.5 = 100% APP W.1, 61.8% APP W.1-3 and 162% W.4. Wave-1:c was very short and the 100% APP (W.5=100% W.1) falls below the 61.8% retracement and the W.3 high. This projection is ignored. The other two minor projections cluster very close together just below where W.c = 127% Ret. W.b. These two minor projections for W.5:c fall right within the larger degree projected zone for W.c. The W.5:c high was made at 122.26, just one tick below the minor degree projections at 122.27-122.29! Do you see how the smaller degree projections help to focus in on the highest probability price zone to complete the larger degree pattern?

If we have intraday data available, we can better focus in on the wave

structure. The chart below is 30-minute data for bonds for the period of W.c. With the daily data, we considered Feb. 6 as the W.b low. The 30-minute data shows just one wide range bar that was the first bar of the day of Feb. 6 which spiked down to make the new low. An examination of the 5-minute data, the shortest period I had for intraday data for bonds, showed that it was only the 5-minute bar that also traded this low. More than likely there was just one or two trades that were made at the lower price level before the market spiked back up and completed the decline on Feb. 9 just above the low of Feb. 6. I have begun the intraday wave count from the Feb. 9 low instead of the Feb. 6 low as Feb. 9 obviously appears to be the real beginning of the W.c advance.

Since the Feb. 9 low is only a few ticks above the Feb. 6 low, there will not be a great deal of difference in the price projections. This example illustrates how the intraday data may provide more accurate minor degree projections than if we only have daily data available.

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The EOW-5 projections are made from the W.4 low made on the afternoon of Feb. 12 on the 15:00 bar (3 PM, EST). Wave-1 was very short in price and the 100% APP (W.5 = 100% W.1) projection falls below the W.3 high. This projection is ignored. The projections where W.5 = 61.8% APP W.1-3 (122.22) and 162% Ret. W.4 (122.31) provide the high probability target zone for W.5. The W.5 high was made at 122.26, right within this zone?

The daily data and swing chart shown previously showed this same projection at 122.27-122.29, which was slightly above the beginning of the 122.22-122.31 projections made with the intraday data. Why? The minor swing highs and lows are slightly different on the daily data chart than on the 30-minute data chart.

Are you ready to take the price projections even one degree smaller? The chart below is 5-minute data for just the five trading day period (Feb. 12-18) of W.5:5:c. Wave-5 price projections were made from the W.4 low made on Feb. 17 on the 14:05 bar. Two of the price projections at 123.04 and 123.08 fall above the price zone projected for the larger degree W.5:c shown on the 30-minute data on the chart above. They should probably be ignored. Our purpose of projecting from the smaller degree waves is to see if the smaller degree projections fall within the price zone of the larger degree.

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11 One projection, where W.5 = 162% Ret. W.4 at 122.26, falls within the price zone of the next larger degree at 122.22-122.31. The W.5:5 high was made at 122.26, the exact 162% Ret. projection! Bonds confirmed the final top was

probably complete on the decline below the minor degree W.4 low on the 5-minute data.

Waves Within Waves Within Waves

The EOW routine was used to make three degrees of price projections. The first price target was projected for W.c:B. Retracements of W.A and projections for EOW-C were used for a target zone of 122.15-123.05. Then the smaller degree projections using the daily data were made to project the target for W.5:c:B. These smaller degree projections added the 122.27-122.29 target that fell within the larger degree projection of 122.15-123.05.

If we had intraday data available, we made a 30-minute chart and again made the W.5:c projections. The intraday data allowed us to more accurately identify the wave highs and lows than we were able to do on the daily data chart. The new target for W.5:c on the 30-minute data fell at 122.22-122.31, again right within the

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122.15-123.05, W.c target zone. We then went one degree smaller to project the target for W.5:5:c. Only one projection fell within the larger degree target at 122.26. The three degrees of price projections gave us an ideal price target for W.c at 122.22-122.31. This was the price zone that included all three degrees of

projections. The high tick was made at 122.26, right within the price zone! Intraday data is not necessary to make two or more degrees of price

projections, but it can be helpful. If you have intraday data, use it when appropriate to fine-tune the projections. There is often a lot of “noise” with intraday data and you run the risk of loosing track of the larger degree perspective which is evident on the daily charts. If a useful and obvious pattern is not developing on the intraday data, do not try to force a pattern just for the sake of making smaller degree price projections.

I collect tick data at the end of the day from my data service and do all of my analysis outside of trading hours. I suggest you do the same. You would be surprised (maybe not!) how your idea of the market position can change as you watch the market real-time. If you have real-time or delayed data on your monitor during the day, be careful and don’t loose track of the larger degree position.

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EOW Summary

1. In many cases, the EOW price projection routine makes it quicker and easier to make multiple price projections than marking them off one at a time from the Fib-P menu.

2. The EOW routine assumes you have an opinion of the Elliott wave position of the market. If you don’t have an opinion of the Elliott wave position and only want to make a few price projections, it may be quicker and easier to just mark them off one at a time from the Fib-P menu.

3. The EOW routines require a swing chart. If you already have swing charts saved for that data file, bring up the swing chart that is the closes degree to the one you are going to make projections for. Edit the swing chart if necessary so the pivot highs and lows are marked off that you want to project from. When you close the scenario or unload the swing file, you will be asked if you want to save the changes to the swing file. If you made temporary changes just to make these price projections, choose no, and the swing file will remain the same.

4. When the projections have been made, look for those projections that seem to fit within the structure of the market. In most cases, ignore the “outliers.” The highest probability price targets will be where

projections are clustered together.

5. Never expect the market to reach or make a reversal precisely at the ideal cluster of projections. Consider the projected range as a high probability price target for end of the wave projected. Always consider the price target zone within the context of the other market factors such as time and pattern.

6. If a market substantially exceeds a projected price zone, reconsider the wave structure and make projections for the next higher or lower zone by considering a different wave structure or using more than the short-list of ratios.

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Custom Price Projections

The Custom Price Projection (CPP) report is another way to make price projections and display them on the chart. How is the Custom Price Projection report different from the Fib-P routine and the EOW routine?

The Custom Price Projection report uses the same menu as the Fib-P routine that includes the EOW projections. The way the price projections are made with the CPP is exactly the same as with the other two routines. The CPP has several added features that make it advantageous to use at times.

Unique Features of the Custom Price Projection Report

1. The CPP places a horizontal bar against the price scale for each projection. If individual projections fall near each other, the height and the width of the bar increases. The larger bars represent the greatest cluster of price projections. The CPP provides a visual representation of the price clusters on the chart.

2. The CPP may be saved. If the CPP is saved, the user may choose at any time whether he or she wants to display it on the chart.

3. A detail table of each individual projection represented by any CPP bar may be brought up by clicking on the CPP bar.

4. Price projections may be added to any saved CPP report at any time. This is particularly useful as a market progresses and the user wants to add the most recent minor degree projections to a saved CPP of larger degree projections.

Let’s take a look at the bond example we just examined in the EOW section above and see how the CPP report may be used.

The bond chart below shows the same period when the projections for Wave-C were made in the EOW section above. This time the projections were made from the Custom Price Projection report. As you can see, the menu where the

projections are chosen is the same as the Fib-P menu.

2 projections were made from the Jan. 26 low (labeled W.A) and EOW-C projections were made from the Feb. 6 low (labeled W.b). The horizontal lines represent each projection. The bars against the price scale represent where the projections are made. The bar at 123.00 is larger than the other bars because two projections fell close together.

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15 The CPP bar-height scale may be adjusted to make the width of each individual bar taller or shorter. In the chart above, the scale is set at .10. The height of each individual projected bar will be the projected price plus and minus 1/10 of 1%. If the projected price is 122.00, the CPP bar will be 122.00 plus and minus 1/10 of 1% or 121.28-122.04. 122.00 x .001 = .122. We must translate to 32nds. 32 x .122 = 4 (3.9). Add and subtract 4/32nds from 122.00 for a range of 121.28-122.04. You may want to adjust the bar-height scale while the CPP is being made to make the projections overlap with one another and create a larger bar. We can save this CPP report and bring it up on the chart at any time. Use a logical system for naming each report. I usually include in the name the date projected from and the wave label I am projecting. In this case, we may name the report “W.C Fr. 1/6/98.”

We can add new projections to a saved report at any time. Let’s add the minor degree projections for Wave-5:c to the saved report. The chart below has added the minor degree EOW-5 projections. These projections fell very near the larger degree projections that had already created the largest bar when the report was first made. The bar is now even relatively larger compared to the other bars that only represent one projection each. We now have a very visual representation of

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the high probability price target that includes four price projections of various degrees.

Note that neither the 50% retracement of W.A or the 100% APP projection (W.5 = 100% W.1) is included on the CPP above. After first making each price projection in the CPP report, you are asked if you want to add the projection to the report. If a projection is not relevant, you can choose “no” and then re-choose which ratios you want to use. When the EOW-2 projections were made, bonds had already advanced above the 50% retracement. Rather than save the retracements to the report with the 50% retracement, I checked off the 50% retracement and made the EOW-2 projections with just the 61.8% retracement. I did the same with the W.5 = 100% APP W.1 projection when making the EOW-5 projection.

The CPP report was initially created and saved with the projections shown on the first chart. Later, the minor W.5:c projections were added. Projections of more than one degree may be made at the same time when the report is initially created. The swing chart may be edited while the report is being created. You are not limited to the swings that are initially brought up on the chart. Just remember when you close the chart, you will be asked if you want to save the edits made to the

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17 swing file. Be sure and click “no” if you do not want to save the edits. If you click “yes”, the current swing file will be over written with the changes. If you want to keep the old swing file and a swing file with the new changes, choose “save swing file as” from the Swings Menu.

The chart below shows the CPP after it has been saved. Right click anywhere on a chart and one of the menu choices is to “show custom price projection.”

If the CPP bars are shown on a chart, you can view the details of all of the projections by clicking on a bar that will bring up the CPP detail table. The projections that make up the bar that was clicked on will be highlighted in yellow.

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The Custom Price Projection report is a convenient way to save multiple price projections and have a visual representation of the price target zones without having a lot of overlapping horizontal lines on the chart. A CPP report may be made with any time period data file – intraday, daily, weekly or monthly. The CPP report is another unique feature of Dynamic Trader.

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Price Rhythm Zones

Price Rhythm Zones (PRZ) are a statistically derived measure of the price rhythm of a market. Price Rhythm Zones measure where a trend or counter-trend has the greatest probability of terminating based on the historical swings of similar degree. The Price Rhythm Zone projection is made in essentially the same manner as the Time Rhythm Zone projection.

The PRZ projection is made from two price projections of the chosen historical swings - the Alternate Price Projections and the Retracements. The PRZ projection report in Dynamic Trader requires a primary and reference swing file.

The primary file swings are used to make the historical calculations and projections. The larger degree reference file swings represent the bull or bear trends and are used to determine which of the primary swings are in bull markets and which are in bear markets.

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21 In the weekly chart of bonds below, each of the primary swings are 5% price change or greater. They represent the intermediate degree swings that are obvious on the weekly chart. The reference swings (thick lines) represent the obvious major bull and bear trends. Once a change in trend is confirmed by making the minimum price percentage change (in this case 5%), a Price Rhythm Zone may be projected.

First, let's look at the end result of a PRZ and then see how it was derived. The bond chart below shows the PRZ projection from the April 1993 low.

The PRZ projection on the chart below only uses swings from the current bull trend to keep the illustration simple. In most cases, you will want to use primary degree swings from more than one bull or bear trend.

Each of the swings in the primary file made at least a 5% percentage change in price. The objective is to calculate the high probability price zone where the bull swing from the April 1993 low should terminate based on swings of similar degree from current and prior bull markets. The PRZ is made from two types of price projections – Alternate Price Projections and Retracements.

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Alternate Price Projections (APP)

Alternate Price Projections may be made by price range or by percentage change in price. When making intermediate degree projections within major bull and bear markets, it is best to use percentage change.

Between the Sept. 1990 low and the April 1993 low, there were four rally swings as shown in the chart above. The rallies were between 11.47% (Sept. 1992 high) and 14.50% (Jan. 1992 high). All four Alternate Price Projections (APP) will be made for the PRZ. The APP zone that will be part of the PRZ projections will be bounded by the shortest and longest APP which in this case is 11.47% and 14.50%. The price target range based on the Alternate Price Projections is 119.06-121.13 or an 11.47% to 14.50% rally from the April 1993 low. The APP projected price range is represented by the thick vertical bar show on the right of the PRZ in the chart above.

Retracements

Retracements of past swings of similar degree are also calculated and the equivalent price objectives are projected from the current pivot. In this case for bonds, we are projecting the potential price target of a rally swing in a bull market. Since the up-swings in a bull market should always be greater than the corrective, down-swings that preceded the up swings, the up swings will always be an

External Retracement (greater than 100%) of the prior down swing. The Jan. 1992 high completed a rally of 14.50% (see the chart above). The prior decline into the June 1991 low was 6.61%. The up swing from the June 1991 low to the Jan. 1992 high was a 219% retracement of the prior decline (14.5%/6.61%=219%). Each External Retracement is made in this way. The range of the external retracements is represented by the thick vertical bar on the left of the PRZ.

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PRZ Overlap Range

The PRZ overlap range is where the APP projections overlap with the Ret. projections. The PRZ is shown as the grayed area between the two thick vertical bars. By right clicking on the PRZ projection, the detail table will be shown on the chart. Below is the detail table for the PRZ projected from the April 2, 1993 low.

The Price Overlap zone is 120.13-121.05. Based on the most recent advances in a bull market, the ideal target for a high from the April 2 low is this range. Notice that under the “Type” column, both the Ret (retracements) and Alt (alternate price projections) are followed by the “%” sign. This shows that the price ranges were measured by percentage change rather than price range.

The Sept. 1993 high was made just above the ideal PRZ overlap zone. The PRZ prepared the trader for the broad price with the greatest probability of making the next intermediate or greater degree top.

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Another PRZ Projection

The chart below shows the PRZ projection from the April 11, 1997 low in bonds. In this example, we are using the primary swings from the three most recent bull markets to make the PRZ projection. The PRZ overlap range is 120.08-128.22. Based on all intermediate-term swings in the three bull markets since the Sept. 1990 low, the rally from the April 1997 low should not make a 5% or greater decline prior to reaching at least 120.08 and should not exceed 128.22

While this is a relatively broad price target, it provides the high probability minimum and maximum price targets for the trend from the April 1997 low which began at 106.12. As of when this section was prepared, bonds have continued to rally from the April 1997 low right into the center of the PRZ.

This PRZ could have been made as early as June 20, 1997 when bonds had made a rally greater than 5% from the April low. Bonds were at 112.24 at this time and the PRZ called for a rally to 120.08 or higher. How valuable do you think this information would be to you?

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25 The Price Rhythm Zone Detail table below shows the minimum and maximum projections made from both the Retracements (RetR) and Alternate Price

Projections (AltR) as well as the Price Overlap Zone of 120.08-128.22.

Let’s review just what this PRZ projection is telling us for the projection above.

1. As of June 20, 1997 bonds had rallied over 5% from the April 11 low. A new swing low is recorded and we can project the PRZ which should be reached based on historical swings of similar degree.

2. Based on the 5% or greater swing chart, the PRZ is the target for which the bull trend should reach without having made a 5% decline or greater against the bull trend.

3. The PRZ is 120.13-126.17 which is the overlap zone of the APP and External Retracements based on past rally swings of similar degree in bull markets. The minimum price target is 120.13 and the maximum price target is 126.17. While this is a broad range, consider that this target range was projected from a low at 106.12.

4. If bonds approach this intermediate degree PRZ, we can then project the smaller degree PRZ which will focus in on a narrower price zone for the termination of the larger degree trend.

Price Rhythm Zones are simple statistical projections made from historical measured swings. If the swings of similar degree in the primary swing file used to make the PRZ have been fairly symmetrical, the projected PRZ will be relatively narrow like in the first bond example above which used only a limited number of swings that all very similar in price range. If the swings had not been so regular, the PRZ will be relatively broad as we saw in the second bond example above.

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Even though the PRZ was very broad, it still provided useful, statistical information that prepared the trader for the price zone the trend would reach.

Price Rhythm Zone projections may be made on any time period bar chart and any degree of change.

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Dynamic Time Projection (DTP) Report

If we want to do several Time Cycle Ratio projections and Time Counts on the bar chart using the Fib-T and Time-C routines in Dynamic Trader, the chart may become very cluttered and it may be difficult to distinguish where the time projections cluster even with the “no label” option set.

The Dynamic Time Projection Report provides a quick and easy way to do a wide variety of time projections all at once and avoid the chart clutter.

The bond chart below shows just three time projections which include a 55-CD count from the Jan. 12 high, the 38.2% Time Retracement of the most recent bull swing prior to the Jan. 12 high (8/26L-1/12H) and the 200% Alternate Time Projection. If we wanted to include more Time Cycle Ratio and Time Count projections on the chart from other pivots, the chart would soon be cluttered, projections would visually overlap each other and it would be difficult to

distinguish where the target dates fell. If the projections extend beyond the last bar of the file, we would have to scroll the bar chart far to the left before the future projected dates would come into view. The Fib-T and Time-C bar-chart routines are convenient to do a few projections, but cumbersome if the user wants to make a comprehensive time analysis with many projections.

One solution that avoids the chart clutter and confusion is to use the Dynamic Time Projection Report.

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Dynamic Time Analysis (DTP)

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The Dynamic Time Projection report provides a variety of templates that allow all of the Time Cycle Ratio, Calendar Day and Trading Day counts to be made at once. Which ratios and counts will be included and which swings will be compared will depend on which template is chosen. Dynamic Trader includes templates for the typical Elliott Wave positions. If no Elliott Wave position is evident, there is a default and trading range template.

For this bond example, we will look to project from the Jan. 12 high (top of wave-3) the time periods with a high probability of making a wave-4 low. Just as there are typical price relationships to project the high probability price targets for a wave-4, there are also typical time relationships and counts that will help us project the high probability time targets to complete wave-four.

The Dynamic Time Projection Set-up menu below shows that we are

projecting from the Jan. 12, 1998 high, the report will be for projections from 15-80 bars (TDs) from Jan. 12 (approximately three weeks to almost four months), and we have chosen the wave-4 sets to make the projections.

If we click on the TCR Sets button, a table which looks like a spread sheet comes up to show us exactly which ratios, counts and swings are used for that set. The table also shows how the projections are distributed and weighted. If you are

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3 not clear exactly what is involved in the distribution or weighting of a time

projection template, review the User’s Guide which describes in detail how this works.

The material earlier in this chapter described and illustrated what the

abbreviations represent for the nine swing relationships such as TR.1 and ATP.1.

What the DTP report is doing is very simple. It is making all of the Time Cycle Ratio and Time Count projections at once that have been chosen in the template. Instead of marking them all off one at a time on a bar chart and having the bar chart hopelessly cluttered with dozens of projections, they are all made in the DTP report and saved as a histogram that may be brought up in an indicator window.

Let’s take a look at how these projections would be made on a chart if we did not have the Dynamic Time Projections report. First, let’s have a quick review of the swing comparisons that are made. The bar chart below has been marked off to show the swing comparisons that are made when projecting a Wave-4.

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4

Look’s confusing when we look at it from this perspective, doesn’t it? Now let’s take a look at the bar chart if we did all of the Time Cycle Ratio projections for a wave-4 right on the chart with the Fib-T routine.

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5 The chart above only includes the TCR projections and no Calendar or Trading Day count projections. Now you can see how the DTP templates offer a much quicker way to do a wide variety of projections. The DTP templates also offer the user the opportunity to weigh each individual projection by importance on a scale of 1-3.

Weights of Each Projection

The templates allow the user to choose what relative value or weight to give any one individual projection. Each projection may be weighted from 0 to 3. The Wave-4, TCR template is shown again below. The projections that are considered the most important are given a weight of three. They have been outlined below.

Because this is a projection for a Wave-4, no TR.5 projections are included. Note that none of the ATP.2 or cycle projections are given a weight of three as they are not as important as the TR.1, TR.3 and ATP.1 projections for a Wave-four.

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6

The table below shows the histogram and table of the DTPs made from the Jan. 12, 1998 high for a potential wave-four low. There were three time periods during the period of the report (Feb. 3-May7) that had the relatively highest scores (those over 31). The time periods were March 5-6, March 21-22 and April 5-12. I have chosen to only show those bars on the histogram with the relatively high scoring hits (over 31).

The table below the histogram lists evey one of the individual hits in a spread sheet format so the user may examine exactly which time factors fell on any one day.

The April 5-12 period not only included the highest score but the broadest period with the most hits. Without considering any factors other than number of hits, we would anticipate the April period should have the greatest probability of making a Wave-4 low. It is important to examine the table of hits to see what time factors fell in each period. It is also important that the user is familiar with the Time Cycle Ratios and Time Counts as described previously in this section of the Trading Course. Occasionally, we find that a relatively high scoring period is a result of the cluster of a large number of minor time factors and the cluster does

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7 not include the more important Time Retracements and Alternate Time Projections described in the earlier part of the course and the Dynamic Trading book.

The table below shows the detail of the April 5-12 period. Consider the time factors in the April period and how they were distributed so you will understand why this period had the relatively high score.

The April 5-12 period includes at least one of each of the three time factors – Time Retracement, Alternate Time Projection and Calendar Day count. Within any projected time zone, the most important dates are usually those dates that include a time retracement or a most recent alternate time projection (ATP.1). In the April 5-12 period shown above, the highest scoring day is on April 11. It received the highest score of the period because two important calendar day counts made a direct hit on April 11. However, it was the earlier part of the period that included the alternate price projection and time retracement, so the earlier part of the period should be considered just as important as the later part.

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8

Let's digress a bit from our specific example and review exactly what information a Dynamic Time Projection provides.

1. DTPs are periods where several time factors cluster within a relatively narrow date range.

2. If the projections are made from a high, the projections are relevant for a low. If the projections are made from a high, the market must be either testing the extreme lows or making new lows for the time period to be considered valid as a potential trend reversal period. Vice Versa if the projections are made from a low.

3. DTPs should be considered in the same manner as Dynamic Price Projections (DPP). They are time support and resistance zones just as DPPs are price support and resistance zones.

4. Most trend reversals are made at a DTP. DTPs are not projecting that a market will continue to trend into any one particular DTP, only that a trend will usually continue until a DTP is reached. If a DTP is exceeded, the odds are high that the trend will continue at least into the next DTP. There are other time analysis routines including Time Rhythm Zones and Fib Time Blitz projections that help to project which DTP has the greatest

probability of terminating the trend.

5. It is critical to be alert to the price and pattern position of a market at the DTP.

Dynamic Time Projections are “directional.” That is, a DTP made from a high is relevant as a potential time period for a trend reversal low, not for a high. The chart below shows a DTP histogram in the indicator window below the bar chart that projects the period of Jan. 15-16 from the Dec. 3 high. If bonds are declining to test a low that has been made since the Dec. 3 high or if they are making a new low going into the Jan. 15-16 period, the Jan. 15-16 DTP is valid and should be considered as “time support.”

In this case, bonds made a low on Jan. 10 followed by a minor corrective rally. Bonds were advancing off of the Jan. 10 low going into the Jan. 15-16 DTP. This period is no longer relevant as a potential trend change period because it was projected from a high and was only valid as a potential low. If bonds are not declining into this period, it is not relevant as a potential trend change. We will see in a later section that Fib Time Blitz projections are “non-directional.” They may be a low or a high.

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9 It was just coincidence that a minor corrective high was made in the Jan. 15-16 period. Since the Jan. 10 low was made outside of a Dynamic Time Projection, the odds are bonds will continue lower at least until the next DTP period. This is a very important time analysis concept. If most trend reversals are made at or at least very near DTPs, what seems like a trend reversal that is made outside a DTP will probably only result in a minor reaction followed by the continuation of the prior trend into the next DTP, just as occurred for bonds in the above situation.

Now, back to our excample of the DTPs from the Jan. 12 high.

How did the Dynamic Time Projections from the Jan. 12, 1998 high turn out? Recall that there were three DTPs for a potential low: March 5-6, March 21-22 and April 5-12. The April 5-12 period included the largest cluster of projections.

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10

Bonds were making a new low from the Jan. 12 high going into the first DTP of March 5-6. Bonds were approaching a price target which included the 127% External Price Retracement where W.C=127% W.B. Wave-C appeared to have subdivided into five waves of lesser degree. The lesser degree 100% Alternate Time Projection fell on March 4, just one day prior to the larger degree March 5-6 period. On March 6, precisely within the March 5-6 period, bonds made a key-reversal-day. Time, price, pattern and daily reversal signal all coincided and a

low was made.

While the April 5-12 DTP appeared to be the more important time period for a potential Wave-4 low during the months of March and April, all of the factors of time, price and pattern coincided in the March 5-6 period and a low was made.

We have only looked at one Dynamic Time Projection example in detail, but the concepts and the procedures are the same for all situations. Every low and high will not be made precisely within a DTP, but most will be made at or within a few days of a DTP. The Dynamic Time Projection report is a quick and easy way to streamline the time analysis procedure. A little practice making and analyzing these reports will go a long way to preparing you days and weeks in advance for high probability periods for trend change.

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11 Users should spend time to become familiar with each of the templates

included with the program. Users should also spend time building their own custom templates.

Dynamic Time Projection Templates

Each of the three time sets (TCR, TD and CD) include the following templates:

Default: Use this set if the conditions are not appropriate to use any of the other

specialized sets.

Waves 1-5 and C: To project the end of each of these waves. Use these templates

if the market clearly appears to be in the position of one of these Elliott wave counts. The Wave-1 set may also be used for Wave-B projections.

TR (Trading Range): Use this template for consolidation or trading range

projections when the market is not in a clearly defined Elliott wave position.

None: Choose the none-set if you do not want any projections made from one of

the sets.

Fib (TD set): Includes the Fib series of numbers for Trading Day counts. Fib-Anv (CD set): Includes the Fib series of numbers and anniversary or annual

counts for up to 12 years.

The CD and TD templates are easy to understand and visualize. They are simply number counts from previous pivot highs and lows. The user has the opportunity to choose what numbers to include, the number of days to distribute the score on either side of the hit as well as what weight to give each hit.

The TCR projections may seem a little more confusing at first. There are 9 potential swing comparisons that may be made with several TCR projections of each possible comparison. A template is included for each of the major wave positions. Let’s take a look at the TCR templates and descriptive bar charts.

Each bar chart will show the major TCR comparisons that are made for each template. I have not included the C:C, DC:C or C:DC on the charts in order to avoid the chart getting cluttered and difficult to distinguish the time ranges for each comparison. Each of the templates includes these three projections as well as those shown on the bar charts.

The vertical marker on each chart is the confirmed pivot from where the projection for the next high or low is to be made. The structure of the market prior to where the marker is shown will not necessarily be the same each time. However, the templates are designed for the most typical structure for that wave position and will usually work just as well if the preceding structure was not in exactly the same shape as shown in the charts below.

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19

Default TCR Template

The default template may be used when ever the market is not clearly in an identifiable wave position. The default template includes all nine swing comparisons with the greatest weight given to the prime Fib numbers.

None Template (not shown)

Each set includes a “none” template. You may choose to not include one of the three templates when making a DTP report. For instance, if you only want to make TCR and CD projections and no TD projections, choose the “none.td” set and no trading day counts will be made. The “none.td” set is shown below. No numbers are included. Even if the template included a series of numbers in the count column, if the Distribution column was all zeros, no projections would be made.

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20

CD Templates

The following pages include the Calendar Day (CD) templates included with the Dynamic Time Projection report. The CD count templates allow the user to choose to make counts from any of the most recent seven pivots. Each projection may be distributed up to four days either side of the target date. Each projection may be weighted from 1-3.

Each template is preceded by a chart that shows a typical market position for the wave in question. The seven recent pivots are labeled so you will be able to visualize which pivots counts are being made from in the respective template.

I have not included the Trading Day (TD) count templates as they will look the same as the CD templates except the counts are made in Trading Days.

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Trading Range CD Template (not shown)

The Trading Range and Fib-Anniversary Templates are the same.

Build Your Own Custom Dynamic Time Projection Templates

There are three templates that may be used for each DTP report – TCR (Time Cycle Ratio), CD (Calendar Day Counts) and TD (Trading Day Counts). Many Dynamic Trader users create and save their own templates. As an example, you may want to create a very simple TCR template that only includes a few ratios and swing comparisons. How about a TCR template that only includes TR.1 and ATP.1 projections? This simple TCR template may only include the time retracements of the most recent swing (TR.1) with only the three ratios of 50%, 61.8% and 100% plus the 61.8%, 100% and 162% ratios for the most recent Alternate Time Projection (ATP.1).

The user may create any TCR, CD or TD template that suits his or her purpose.

The Dynamic Time Projection report is unique to Dynamic Trader. No other software program includes a time analysis routine anything like this comprehensive report. It will be well worth your time to become very familiar with this time analysis approach and exactly what is accomplished with this unique report.

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Practical Elliott Wave Trading Strategies

A Special Tutorial Series For Subscribers To The Dynamic Trader Reports

Practical Elliott Wave Trading Strategies

Part 1

Robert Miner, Dynamic Traders Group, Inc.

This tutorial begins a series of how to apply Elliott wave analysis for practical trading strategies. All subscribers have some Elliott wave background from my Dynamic Trading book. Because that book goes through the pattern structures in detail, there is no need to repeat that information in this tutorial series.

It is assumed for this series, that subscribers are familiar with Chapter 3 of Dynamic Trading and how the most frequent pattern subdivide.

Besides teaching you the practical application of Elliott wave trading strategies, an objective of this series will also be to dispel some Elliott wave myths and bad practices fostered by Elliott wave academics.

Everything taught in this tutorial series will apply to any actively traded market included futures, stocks, indexes and mutual funds and any time frame whether five-minute or monthly.

What You Should Know Before Beginning This Tutorial Series From your study of Elliott wave in Chapter 3 of Dynamic Trading, you should be familiar with these concepts.

Impulse Trend – Usually unfolds in five-waves. Five-wave impulse trends are usually made in the direction of the larger degree trend.

Counter-Trend – Usually unfolds in three-waves. A counter-trend is a correction to the prior impulse trend.

Waves of Similar Degree – Also called swings of similar degree. Waves of similar degree represent the subdivisions that make up a completed structure. In an impulse trend, waves one-five are the waves of similar degree. The subdivisions of each wave are waves of a smaller degree.

Subdivisions of a Wave – Any given wave may subdivide into smaller degree waves to complete the structure of the wave. For instance, Wave-1 of a five-wave impulse trend usually subdivides into five waves of lesser

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Multiple Time Frames - Multiple Time Frames has become a buzz-phrase recently. It is nothing more than R.N. Elliott’s approach to

considering multiple degrees of wave structure. When the subdivisions of a wave are complete, the larger degree wave is compelte.

Trend or Counter-Trend?

What is Elliott Wave Analysis?

Elliott’s Wave Principle is a catalogue of defined chart patterns. These patterns are helpful to indicate if the market is in a trend or counter-trend. Knowing the trend or counter-trend position, we also know the main trend direction. Each pattern has implications regarding the position of the market and the most likely outcome of the current position.

Most pattern positions will have an outcome that will validate or invalidate the assumed pattern position. This is extremely important. It

also helps us to determine the maximum distance away from the market to place the protective stop-loss.

Elliott Wave Pattern Basics – 5’s and 3’s

The basis of Elliott’s Wave Principle is that most trends unfold in five

waves in the direction of the trend and three waves or combinations of

three waves in the direction counter to the main trend. It’s that simple. Markets usually unfold in three’s and five’s. Five wave patterns are

impulsive or trend structures. Three wave patterns are corrective or

counter-trend structures.

A five-wave impulse trend and three wave or more complex counter-trend each has a characteristic structure which we will talk about

continually throughout this tutorial series. One important objective of Elliott wave analysis is to recognize in the early stages of the wave structure whether it is more likely to be an impulse or a counter-trend.

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These three rules are most relevant to daily closing data.

1. Wave-2 should not exceed the beginning of Wave-1. In other words, Wave-2 should not make greater than a 100% retracement of Wave-1.

2. Wave-3 should not be the shortest of the three impulse waves in a five-wave impulse trend (waves 1, 3 and 5). 3. Wave-4 should not make a daily close into the closing range

of the Wave-1.

These rules are extremely helpful to confirm or invalidate a potential pattern. Even when using intraday data, be aware of the pattern and guidelines relative to the daily closing data.

Why is pattern analysis an important part of the Dynamic Trading approach to technical analysis?

1. Pattern analysis helps us to determine if a market is in a trend or counter-trend.

2. Pattern analysis helps us to determine the position of the market within a trend or counter-trend.

3. Pattern analysis helps us to project the time and price objectives of the current trend or counter-trend.

Think Pattern

Below we will go through several pattern examples. The objective is to learn to think in terms of pattern position and what a market must do to confirm or invalidate a particular pattern structure. Every potential pattern position cannot be illustrated, but if you keep the basic pattern concepts and guidelines in mind, you will be able to identify the potential pattern position for most market situations.

Here is a quick review of what we are trying to accomplish with pattern analysis.

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The Three Pattern Questions

1. What is the most probable pattern position? Why? The answer to this question may only be “impulsive” or “corrective.” The answer may also be, “don’t know.”

2. What market activity will confirm the assumed pattern position? What is the pattern guideline that is relevant?

3. What market activity will invalidate the assumed pattern position? What is the pattern guideline that is relevant?

The Three Important Pattern Considerations

1. Be quick to admit when there is no discernable or relevant pattern! Do not force an Elliott Wave count when there is no count that meets the guidelines or a clearly defined five or three wave structure.

2. If there is no discernable wave count, does the pattern appear to be in an impulse or corrective structure?

3. As new data is made, the market will continually confirm or invalidate the pattern position assumption. Trade the market,

not the forecast. Be quick to change your assumption of the

pattern position if the market activity invalidates the current assumption.

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What’s Next?

If a five-wave trend is complete as shown below, what is the minimum pattern we should expect?

Regardless of how this five-wave pattern fits into the larger degree pattern position, at least a three wave decline should be expected. The minimum expectation is for a three-wave ABC correction. This may not unfold but if pattern is to be useful, we must begun with a high-probability assumption and let the market confirm or invalidate that assumption.

If this five-wave trend completed a larger degree five-wave trend, a five-wave decline may follow but the minimum expectation would still be a three-wave.

We always assume a correction will be a three-wave, ABC even though it may take many shapes.

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Trend or Counter-Trend?

What should we anticipate after the low in mid-March below – a counter-trend rally or an impulse counter-trend eventually to a new high?

There is not enough data to give a high-probability answer. The decline shown above is clearly an impulse trend. The position of that impulse trend within the larger degree trend will help determine what next to expect.

If the decline is a W.1, A or 3, we would expect a counter-trend rally (W.2 or B or 4) followed by the continuation of the bear trend to a new low.

If the decline is a W.C, we would expect a continuation of the bull trend to a new high.

If the decline is a W.5, we would expect a larger degree counter-trend rally. The first rally would typically subdivide into five-waves since a W.A is typically five-waves.

Whether the rally is a trend or a counter-trend, we would anticipate at least a three-wave rally (ABC or 123). The position within the larger degree trend will help to determine what to ultimately expect.

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Count Backwards

What’s the pattern of this advance? It definitely doesn’t fit a typical five or three wave pattern. To help determine what a pattern may be, it is helpful to have a firm idea of what is the pattern position of the last major pivot.

If the low in March is a Wave 1 or A, then the rally should be a

correction. We initially assume any correction is going to be an ABC until proven otherwise. This data is up through the date of this tutorial.

Nowhere along the way of this correction did it unfold as a typical ABC. Just today, bonds declined below the prior swing low which signaled the impulsive part of the rally from the late March low (labeled W.B) should be a completed pattern structure, probably a Wave-C that subdivided into five-waves. If that is the case, count backward to see if any wave count will fit. The one above is an acceptable fit within all of the guidelines of Elliott wave.

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Copyright 2002, Dynamic Traders Group, Inc. – www.DynamicTraders.com Wave-A is an impulse. Wave-B is three waves and the W.b:B is also three waves. Wave-C is five-waves. All the subdivisions fit well even though the Wave-C is out-of-balance (much greater in time and price) than Wave-A.

Some times the pattern position does not clearly reveal itself until after it has signaled that it should be complete. Then we need to count

backwards to see if the pieces seem to fit together within the rules and guidelines. If so, we have a basis to make an informed and high-probability trading decision with well defined and acceptable capital exposure.

Trend or Counter-Trend?

Is a 1-2-3 count the best potential for the data below? Why or why not?

The rule that was formed by for the stock indexes is Wave-4 should not make a daily close into the closing range of the Wave-3. For the data

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Copyright 2002, Dynamic Traders Group, Inc. – www.DynamicTraders.com above, the potential 4 has made several daily closes into the Wave-1 closing range although the decline below the Wave-Wave-1 high is small in price. It is acceptable for a Wave-4 to close and trade slightly into the range of Wave-1 for commodities and individual stocks.

A better wave count may at first seem to be the high on the chart is a completed five-wave trend as shown below. The main drawback here is the Wave-4 is much shorter in time and price than the Wave-2 – it is out-of-balance with Wave-2. While this doesn’t rule out a five-wave count, the alternate wave count shown below where the high is a Wave-3 that cleanly subdivided into five-waves is just as good a count.

At this point in time, neither of the two wave counts is overwhelmingly favored. According to the rules and guidelines, either is acceptable. It will require more data to determine which may be best. The trader must also look to other factors such as the time, price or seasonal position to get a better idea of which wave count may be more probable.

If the five-wave count to the March high shown above is correct, beans should continue the bull trend after completing a correction to the five-wave trend.

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Copyright 2002, Dynamic Traders Group, Inc. – www.DynamicTraders.com If the alternate count is correct, beans should be in the process of completing a Wave-4 low which should be followed by a continued advance to a new high.

Which count becomes the most evident as more data is included will help to determine the extent of the next bull trend – A Wave-5 or entirely new five-wave trend.

Lessons Learned

The Three Elliott Wave Rules

These three rules are most relevant to daily closing data. They should be

committed to memory.

1. Wave-2 should not exceed the beginning of Wave-1. In other words, Wave-2 should not make greater than a 100% retracement of Wave-1. 2. Wave-3 should not be the shortest of the three impulse waves in a

five-wave impulse trend (five-waves 1, 3 and 5).

3. Wave-4 should not make a daily close into the closing range of the Wave-1.

The Three Pattern Questions

Whenever considering an Elliott wave pattern, you should ask yourself these three questions and not consider an Elliott wave count unless you can answer all three.

1. What is the most probable pattern position? Why? The answer to this question may only be “impulsive” or “corrective.” The answer may also be, “don’t know.”

2. What market activity will confirm the assumed pattern position? What is the pattern guideline that is relevant?

3. What market activity will invalidate the assumed pattern position? What is the pattern guideline that is relevant?

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The Three Important Pattern Considerations

If you are using Elliott wave for practical and logical trading strategies and decisions, these three considerations will always be in mind. 1. Be quick to admit when there is no discernable or relevant pattern!

Do not force an Elliott Wave count when there is no count that meets the guidelines or a clearly defined five or three wave structure.

2. If there is no discernable wave count, does the pattern appear to be in an impulse or corrective structure?

3. As new data is made, the market will continually confirm or invalidate the pattern position assumption. Trade the market, not

the forecast. Be quick to change your assumption of the pattern

position if the market activity invalidates the current assumption.

More To Come

Each week, a new tutorial will build on what we have learned. Also, in the regular report, I will expand on the pattern comments to relate to what is being taught in the tutorials. The pattern descriptions in the report will help you to learn how pattern is considered to be part of a trading decision as a market unfolds.

Over the next few weeks, I believe you will have had the most

comprehensive and practical Elliott wave pattern education available from any source. You will clearly understand how pattern can be an important factor of your trading decisions. You will also understand and how to apply Elliott wave pattern to make the high-probability time and price projections that are a key to trend targets, reversals, continuations and other trading strategies.

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Practical Elliott Wave Trading Strategies

Part 2

Robert Miner, Dynamic Traders Group, Inc.

Part one of this tutorial series taught the most important question related to Elliott wave analysis – Is It An Impulse Trend Or A Correction? The assumption for this tutorial series is that all subscribers have a basic Elliott wave background as taught in chapter three in the Dynamic Trading book. The next few tutorials will look at the recent and current position of a number of markets to see what we can learn about the trend position and potential reversals based on the pattern position.

Each tutorial will dissect just one market and the recent data to see how the pattern position has unfolded in recent weeks and days. The best learn experience is always with current examples as we can then see how the market unfolds related to how we view the current pattern position and what should be the outcome.

As you will see, the pattern and trend position is not always clearly defined, but, we can usually use the EW pattern analysis to identify the specific market activity that will confirm or invalidate the probable pattern position.

This Week’s Lesson

It’s Either One or the Other

The pattern position is not always clearly defined. Sometimes a market reaches a juncture where the sub-divisions of the pattern position indicate it is either a correction or an impulse. When this is the case, Elliott wave pattern analysis will usually provide the specific market action that will confirm which of the potential patterns is most probable and how the market should follow through.

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What’s Next?

From the Nov. high, bonds clearly made an impulsive decline into the Dec. low. From the Dec. low, bonds clearly made a corrective rally into the Feb. high. From the Feb. high, the decline to the March low was clearly

impulsive. What type of pattern should the rally from the March 21 low be? It depends.

Impulse-correction-impulse could be an ABC correction or part of a more complex correction. It could also be waves 1-2-1:3 of a larger degree bearish impulse trend. It depends on what we would label the Nov. high.

If we considered the Nov. high the end of a multi-year bull trend, March should not be the end of an ABC correction. If we though the Nov. high was only temporary, March could be the completion of an ABC correction.

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Copyright 2002, Dynamic Traders Group, Inc. – www.DynamicTraders.com If we have no strong opinion one way or the other about the Nov. high, how could the pattern of the advance from the March low help us to identify the larger degree pattern/trend position?

If the rally clearly unfolds in an ABC or other more complex corrective pattern, the larger degree trend is probably bearish and will eventually make new lows well below the March low.

If the rally clearly unfolds in an impulse trend, March should be the end of an ABC corrective decline from the Nov. high or the impulse may be a Wave-A which is part of a larger degree correction.

Let’s take a look at the 60-minute data from the March low into mid-April.

Is the pattern of the data above clearly impulsive or corrective? From my point of view, it is not clearly one or the other. Let’s put the most

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Once bonds traded below the 99’31 swing low, we could assume the April 15 high completed some section of the trend. If we count backwards from the April 15 high, there is a clear five-wave impulse from the March 28 low. The ABC from the March 19 high to the March 28 low meets all of the guidelines for an ABC. Waves A and C are clearly impulsive as they should be. Wave-B is an ABC itself.

What could bonds do to signal if the April 15 high is a Wave 3 or a Wave C? A Wave-4 should not trade into the range of the W.1. If bonds traded below 99’16, the potential W.1 high, we would assume April 15 is a W.C high. If this were to occur, bonds may still trade to a new high but the continued rally would have to be considered a complex correction, not an