Type I Buy
Type I Buy
This identifies issues that are Type I Buy setups, which means that the profit-taking period after a major up trend may be over and the price is positioned to continue upward. For a comprehensive explanation of Elliott Wave theory, click here.
For Advanced GET Users:
It does not matter whether it is an upward moving sequence or a downward moving sequence, once the Advanced GET software confirms a Wave 3 is in progress, start monitoring more closely for the following conditions:
1. Look for the 5/35 Elliott Oscillator to pull back at least 90%, or to the zero (base) line. Make sure this pull back never exceeds more than 1.40 of the previous oscillator peak.
2. The Profit Taking Index (PTI) should, at this time, be above 35. The PTI is a proprietary indicator that aids in determining the probability for a Wave Five to occur in an Elliott Wave five wave sequence. When the PTI drops below 35, the statistical odds are greatly reduced for a Wave Five rally. In addition, odds will increase for a Fifth Wave failure to occur if the PTI is less than 35.
3. A retracement should hold above the Wave Four Channels. Wave Four Channels are proprietary channels that provides the much needed timing element for Elliott Wave analysis. The ideal Wave Four should complete above one of the blue, green, or red Wave 4 Channel lines. Containment of the retracement levels above the top two channels provide a higher probability for a stronger rally in Wave Five. This step is not as critical as the Profit Taking Index in Step 2.
4. Calculate the stop two Fibonacci levels under the entry level. For example: if your entry is at the 38% level, the stop should be placed two levels under (which is below the 62% retracement area).
5. Look for the fifth wave projection target given by the software. Calculate the potential profit/stop ratio. If this ratio is greater than 1.5, the trade is worth considering.
The logic is the same for an advancing upward sequence as it would for a declining five wave sequence.