Stocks & Commodities V. 31:10 (10-15, 46): The Missing Link, Part 2 by Mircea Dologa
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The Missing Link, Part 2 by Mircea Dologa
A Golden Approach
In this second part of a two-part series, you see the time & price relationship develop in real time on a chart of gold futures.
Last month in part 1, I discussed how I examine the time & price relationship in the market by focusing on the fourth wave, W(4). I used a combination of Elliott wave analysis, Gann methodology, and mapping multiple time frames, all of which I consider before making any final trade determinations. Once this analysis has been performed, the next step, which is a detailed study of the particular market you are trading, comes naturally. Here, I’ll use the gold continuous futures contract as an example.
The price of gold futures tends to exhibit a complex development, which is why I chose to use it as an example to discuss the relationship between time & price. Understanding this relationship can help you identify the optimal time frame setup for your market.
The development of W(4) wave is fundamental in revealing where the current impulsive pattern, or main direction of the trend, terminates. Here, I will present some arguments that expose the future potential of W(4) and W(5) waves, with W(5) terminating the current parabolic impulsive pattern.
Indirect and direct
If you closely observe the monthly chart of the gold continuous futures contract in Figure 1, you can see that the time & price elements efficiently predict the development of W(4) wave and W(5) wave.
Indirect impact: The indirect impact of the price & time relationship of W(2) wave on the development of W(3) is relevant. The long duration of W(2) implied a strong buildup of the market’s kinetic energy, which, as a consequence, had a strong W(3) wave momentum, responsible for its parabolic shape. Price-wise, the size of W(3) wave was 2.146 times the size of W(1), climbing all the way up to the 1923.7 key level, thus halting the market flow at exactly this Fibonacci key level.
The high-steamed momentum of W(3) wave implies a deeper than classic retracement (38.2%) of W(4) wave. On the other hand, you could say that this retracement is still in progress due to its current position in the OSC (5,35) indicator on the subchart in Figure 1 — outside the 0.90–1.40 W(4) zone. In addition, this tremendous parabolic trajectory occurred in 144 bars, a legendary Gann number period — the square of 12 (12 x 12 = 144 bars). This number will help define the future time retracement degree of W(4) wave. Hence, it becomes necessary to be aware of the following numbers of bars when it comes to observing time: 18, 36, 54, 72, 90, 108, 126, 144, and so on — numbers that represent Gann ratios (eighths, quarters, and halves).
Before continuing, I think it’s necessary to mention something about the validity of this type of labeling for the entire impulsive pattern. The W(2) duration of 236 bars may appear to be confusing, but this W(3) wave labeling (Figure 1) is one of the most probable due to multiple confirming factors:
A Golden Approach
In this second part of a two-part series, you see the time & price relationship develop in real time on a chart of gold futures.
Last month in part 1, I discussed how I examine the time & price relationship in the market by focusing on the fourth wave, W(4). I used a combination of Elliott wave analysis, Gann methodology, and mapping multiple time frames, all of which I consider before making any final trade determinations. Once this analysis has been performed, the next step, which is a detailed study of the particular market you are trading, comes naturally. Here, I’ll use the gold continuous futures contract as an example.
The price of gold futures tends to exhibit a complex development, which is why I chose to use it as an example to discuss the relationship between time & price. Understanding this relationship can help you identify the optimal time frame setup for your market.
The development of W(4) wave is fundamental in revealing where the current impulsive pattern, or main direction of the trend, terminates. Here, I will present some arguments that expose the future potential of W(4) and W(5) waves, with W(5) terminating the current parabolic impulsive pattern.
Indirect and direct
If you closely observe the monthly chart of the gold continuous futures contract in Figure 1, you can see that the time & price elements efficiently predict the development of W(4) wave and W(5) wave.
Indirect impact: The indirect impact of the price & time relationship of W(2) wave on the development of W(3) is relevant. The long duration of W(2) implied a strong buildup of the market’s kinetic energy, which, as a consequence, had a strong W(3) wave momentum, responsible for its parabolic shape. Price-wise, the size of W(3) wave was 2.146 times the size of W(1), climbing all the way up to the 1923.7 key level, thus halting the market flow at exactly this Fibonacci key level.
The high-steamed momentum of W(3) wave implies a deeper than classic retracement (38.2%) of W(4) wave. On the other hand, you could say that this retracement is still in progress due to its current position in the OSC (5,35) indicator on the subchart in Figure 1 — outside the 0.90–1.40 W(4) zone. In addition, this tremendous parabolic trajectory occurred in 144 bars, a legendary Gann number period — the square of 12 (12 x 12 = 144 bars). This number will help define the future time retracement degree of W(4) wave. Hence, it becomes necessary to be aware of the following numbers of bars when it comes to observing time: 18, 36, 54, 72, 90, 108, 126, 144, and so on — numbers that represent Gann ratios (eighths, quarters, and halves).
Before continuing, I think it’s necessary to mention something about the validity of this type of labeling for the entire impulsive pattern. The W(2) duration of 236 bars may appear to be confusing, but this W(3) wave labeling (Figure 1) is one of the most probable due to multiple confirming factors:
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