ANSWERING Bing Yi QUESTION on GOLD trade (3rd August)
Here is what I see when Open trade on Gold:
(1) Bearish Divergent line followed by Bullish Divergent line
(2) Bearish Divergent line appear
(3) Wave UP no.5 show up: That mean the Up trend movement will come to an end
Then I saw Wave DOWN no. 2
That's why I decide open trade Short on GOLD
ANSWERING Bing Yi QUESTION
Friend we need to understand the WEAKNESS of ANY Moving Average Derivative indicator (MACD, RSI, Stochastic, Bol Band, etc)
Those indicator will not work (giving False signal) when the market in a TREND move.
They only work when the market is RANGE market. (see how they give FALSE signal on picture below)
So.... my idea on building Entry & Exit position is waiting the previous wave to END (Wave No. 5)
Why ? Because the next market movement will be RANGE market. And when the market sentiment change from Range to Trend market, I am gonna ride along wave until it END.
1. KFK first (wait until wave 5 showed)
2. Find if any Divergent show up (MACD Divergent or MACD HiLo)
3. ENTER or EXIT the market
Study Pattern on Wave no. 5
As told on Elliot Wave Theory, Wave number 5 as the END of the wave, usually indicate a Divergent movement
I am using MACD Divergent indicator from : https://www.mql5.com/en/code/8665 (I don't have the copyright)
Lest check on simulation data. (picture below)
Rules 1: Wave UP no. 5 shown, Bullish Divergent Red arrow appear. That mean the END of Up trend
Rules 2: Wave DOWN no. 5 shown, Bearish Divergent Blue arrow appear. That mean the END of Down trend
Now, how it appear on REAL price movement using AUD/USD M15 for July 7th to July 22nd 2016 (picture below)
Elliot Wave has been know as one of effective way to predict future price movement. Comparing Elliot Wave count with MACD can give us clear pattern which wave we are in current price market. Understanding the pattern of MACD HiLo will help us thru profitable trade and prudent Money Management. As describe on my previous indicator... this is the main indicator.
Please clearly understand "THE PATTERN" on MACD HiLo, as I showing on the picture. I am using 2 (two) MACD HiLo with diffrent inputs (96,32) and (300,120) to show a clear diffrent on the pattern. Get familiar with the MACD Pattern and always looking for Wave 2, to Enter/Open position and look forward to exit on Wave 5.