Today’s post Swing Trade Chart Patterns Like The Pros is going to be short and sweet. The pivot point for July 18th followed through for the Russell 2000. The next pivot points are slated for July 23…August 2…August 10.
You’ll notice in the chart above of the Russell 2000 a rising channel labelled A-B-C. Elliott Wave theory dictates that when you have price overlap, the chart is telling you that you are in a corrective setup. This my interpretation of course, there can be many interpretations but this is mine. I’ve drawn 2 parallel lines downward to create a channel for possible price movement in the future. Doing this can prove to be successful many times however there are those times when my count is wrong and I have to get out of my position. The setup in the chart will confirm the A-B-C pattern when the price falls through the ascending channel. If the price doesn’t fall through the ascending channel and then proceeds back up then obviously the count is wrong and you have to readjust your count. Your probably asking yourself “how can the A-B-C pattern be corrective if it’s going up”? Well good question…
Elliott Wave analysis dictates that there are 5 impulse wave with 3 corrective waves. To keep it simple, inside the corrective wave pattern you get a zigzag with 5 impulse waves down with 3 waves (corrective) wave up and then 5 waves down again. Sometimes there are complex wave patterns which I won’t get into here but this is the super basic explanation. If you would like to know more about the Elliott Wave Principal, I would suggest going to Elliott Wave International to get tons of insight on the Elliot Wave Principal to Swing Trade Chart Patterns Like The Pros.
I should add too that I also like the the hourly chart to swing trade with, it gives you a different perspective on the market versus the daily chart. Although I look at all the different time frames 1 minute, 5 minute, 1 hour, daily, weekly, monthly…I like the hourly chart the best.
Like I said earlier the next pivot points are slated for July 23…August 2…August 10. I’m anticipating the price to break below the ascending channel, once that happens I’m going to look for a retest to the bottom line on the ascending channel, once that line is tagged look for the price to break down for the first half of August. You’ll notice that the descending channel drawn for the future isn’t very steep so it is quite possible that the price action isn’t going to be very steep. There are instances in the past where the price falls below the the bottom line in the descending channel. If this happens that is a good indication that we are witnessing wave 3 of the 5 impulse waves (wave 3 is sharp and fast and usually always the longest wave).
I hope this helps you Swing Trade Chart Patterns Like The Pros.