Wave -4:Lets get into its details

Currently my Preferred Count is treating the downmove from 5630 as W4 of Impulse started from 4531 upwards in following manner(please bear in mind that if this downmove goes longer,its label may get change--how & when shall be mentioned later).

Trying to recall some of the guidelines for W4:
1.W4 will almost always be a different corrective pattern than W2(Guideline of Alternation);
2.W4 typically ends when it is within the price range of subwave four of W3;
3.W4 often subdivides the entire impulse into Fibonacci proportion in time and/or price.

As my attempt on this blog is to apply the wave-principles on live market, it is imperative that I get into details of W2(=4800-4588=212):

And at first I was inclined to treat this W2 as a simple Zig-zag in following manner:

But then rejected the above labels as a close look at C of the zig-zag revealed that it didnot fulfil the rule v>iii>i of the diagonal. Also B was coming out out to be too small for a zig-zag.

And on Hourly charts,the following labels looked more convincing:

 So delved deeper into it through 5 min charts:

It looked quite acceptable,though c of Z seems to have obviously failed.

Now we have three aspects of W2 ready with us:
1.Retracement percentage: It retraced 78.8% of W1(=4531-4800);
2.Form: It took form of a TZZ(Triple zig-zag);
3.Time: It took 5 days.


Now going by the Guideline of Alternation,W4 should
1.Retrace maximum 38.2% but chances of its doing only 23.6% become very high.
2.Form: Combos are least possible now.
3.Should take 3 days only,so Monday should see beginning of W5 upwards.

And going by the guideline "W4 typically ends when it is within the price range of subwave four of W3": This W4 should remain confined to 5323(tentative end of subwave four of W3)--see chart below:

(Though I must mention here that fractals of W3 are not very ideal).


Conclusion: If this downmove is W4,it should not go below 5323.
So fresh longs as well as previous longs should keep 5323 as their Stop-loss.

Raghu

PS: This is only the discussion for possible targets of W4 when seen as part of Impulse(from 4531 up). A microscopic analysis of its internal ABC would be done on Monday morning post---

Not above 5620:Nifty Counts(Updated on 9.2.12)

Today,31.3.2012, I look at these labels and feel a bit embarassed. It contains a very common mistake that many EW followers commit. Labelling ABC as a zig-zag wherein A is a 3 wave form.




But I donot expect it to cross 5460.
Why?
Because the upmove started from 4531 is being seen as follows:





Now as we move towards the last leg of the upmove,I have conviction to state that today's action would follow following pattern:
So far 5(started from 5078) of Upmove (from 4531)has done:
(i)=5078-5290(212)
(ii)=5290-5226(64)
(iii)=5226-5390(164)
(iv)=5390-5325(65)
(v)=5325-5380*

This (v) can not be more than (iii) so maximum it can do is 163+5325=5488;
Also for a proper wave form, this (v) has to be of a length wherein (i)=1.62*(v).
So (v) can be,at the most 130.5.
Thus maximum length for (v) comes to 5325+130.5=5455

Raghu