- A few key items and notes here. First we didn't know when the 5th wave of this ABC correction would end. measuring the Top of Wave 1 and the end of Wave 3 gave us a clue of where the 5th Wave may end. Look at this chart and see how it nearly caught the top perfectly at the 162% level, amazing!
- Look at how well the MACD shows the formations of the waves, a very handy tool.
- Also look how well the MACD measures the momentum, look at how near the end it crossed and confirmed the upward move was losing momentum.
- Also notice that 1.3333 level is a key Fib level of the entire more, it just happened to be the 78.6% retracement of the entire move down.
- Be careful of extensions, you can see here Wave 3 extended, you could mistake this extension for the end of Wave 5, go short and you'll be way too early on the reversal.
- No trend, no matter how sure it looks is a sure thing. The Eur/$ short is a perfect example, it looked like it was on a one way move. Ignoring that it can correct, and correct in a big and surprising way is one way to lose and give back all your profits.
- Buying and Holding, especially in a Bear market is not only dumb, but a good way to psychologically get buried, you'll be lucky to have your wits if it does turn back in your favor.
- When our target is hit, we will scale down and tighten stops. Shorts will be covered next time, and replaced with limit orders when the market goes the opposite direction of the trend.
- KNOW THE TREND AT ALL TIMES, not just at times. If you stay in a trade too long and ignore the current trend, you could be adding huge loses that will wipe out any gains.
- Do not sell the bottoms or buy the tops.
- Make better use of stopping and reversing.
- The Drawdown was not fun, it could last 2+ months and can be misery, stopping out and getting back in later is a far better choice, so use it.
- Seasonality- Some months are just not great to be Long the dollar, June and July seem to be those months.
