Last Friday there was a discussion in the CiL on the validity of EW's use for trading. Below I have posted an excerpt of a discussion (primarily my response and suggestion on how to use a current setup for a trade).
During that Friday, I noticed what I believed to be (at the time) a Leading Expanding Diagonal. Those who read my blog know that I posted on this pattern. It turned this was not the case, however, what EW provided was a case for a new impulse wave down or potentially a wave iv down.
This provided a clear setup for either the bull or bear camp. Below at 18:07 I provide an example on how to setup the trade.
It is clear, if you took a bearish stance and trade, it work out alright as of this morning (chart above)
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17:55
KungFu(Grand)a:
here's my EOD update:
http://waveprinciple.blogspot.com/2010/02/21910-eod-update.html
will be curious to see if the Leading Expanding Diagonal applies here.
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18:07
KungFu(Grand)a:
typically tanger it would be.
with EW it can be a wave 1 (down or up). but that is all relative to the count.
so in this particular case, it may be a wave 1 down if u take everything else into consideration (61.8% fib retrace, count the waves complete, hitting the 50 dma and etc. )
it will be very easy to determine what it is come monday whether this is a wave iv of wave i.
break below 1106 and i will call it a wave 1.
break above 1112 and it will be a wave 4.
so here would be a good example of a trade setup. if ur bullish, u could have gone long here and stopped at 1106.
if you were bearish, short and stop at 1112.
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