EW Analysis with FIRE.

With your blessing and inspiration from the other respected fellow members of your forum, I dared to dabble in the Ratio Analysis part of EW for my own understanding. Starting with your 4-part EW write-up, I consulted a few books, primarily Frost & Prechter. It may be completely wrong, but this is an indulgence expected from you by this student.

Further projections are not included here as I would await your further guidance in this matter.

SUBDIVISION OF C.3

3.(1).i – 6181 – 6022 = 159 points

3.(1).ii – 6022 – 6059 = 37 points

3.(1).iii – 6059 – 5741 = 318 points = 200% of 3.(1).i

3.(1).iv – 5741 – 5843 = 102 points = about 33% of 3.(1).iii

3.(1).v – 5843 – 5698 = 145 points = shortest (normal, as iii is extended)

3.(2).A – 5698 – 5874 = 176 points

3.(2).B – 5874 – 5624 = 250 points

3.(2).C – 5624 – 5801 = 177 points = 100% of 3.(2).A

3.(3).i – 5801 – 5417 = 384 points [ 3.(3) completed ?]

3.(3).ii.a – 5417 – 5527 = 110 points

3.(3).ii.b – 5527 – 5402 = 125 points

3.(3).ii.c – 5402 – 5556 = 154 points = about 138.2% of 3.(3).ii.a [ 3.(4) ?]

3.(3).iii – 5556 – xxxx = ? [3.(5) ?]

The Ratio analysis helps us to clearly identify the count of impulse waves and corrective waves. Up to the completion of the 2^nd wave of 3^rd, there is not much problem. But after that, there comes the Alternative count (marked by red). My reasons for going for the first count (in black) is given below ---

1) If we take the correction from 5407 to 5556 as the 4^th of this 3^rd, then both 2^nd & 4^th become flat corrections in the same larger impulsive 3^rd. But by the rule of Alternation, either of them should have been a Zigzag or triangle.

2) 3^rd wave can’t be the shortest one. Actually, in the stock market, 3^rd is mostly the Extended one. Its minimum target comes to 100% of 1^st. The majority of the time, it terminates between 161.8% and 261.8% of the 1^st. Even then, if we take 5417 as the completion of 3.(3), it implies that 3.(5) will be the shortest one. That would mean 3.(1) is the extended one, which is the least probable wave to do so according to EW. Clearly, 5^th can’t be the extended one in this scenario.

3) 3.(1) is 483 points. By the Alternative count, 3.(3) is 384 points. Then 3.(5) must be less than 384 points. But then no waves would approach the rule of Equality.

4) Lastly, Elliot talked about the “Right look”. The alternative count doesn’t give that.

In conclusion, the Alternate count could come true, but it would make this instance a truly rare one, creating a combination of many exceptions. So my personal preferred view would be that 3.(3) is getting subdivided and we are in the midst of 3.(3).iii.

And this could make a good difference to our trading at this moment.

With deepest regards,

Your humble student,

Fire

@ Fire,

You said the correct words of Elliot - " Right look" of the waves which is what I generally look in the patterns. With some experience, I have combined the TA to bring in the alternative possibilities.

Till a negation of a particular view does not occur, one should stick to the preferred view. I would say an 80% retrace of the fall from 5556 to XXXX would be an negation of your pref. view.

There are few stocks such as SBI, Tata motors, Tisco are showing reversal possibilities. One should keep such major stock's performance into account.

BN's entire down move from 13300 seem to have a falling wedge kind.

Having said all these, Indian market's fall has confounded many mainly because they continue to look at global markets and expecting a similar upmove to unfold. However, Money has been withdrawn from BRIC markets(barring Russia due to bullish oil) with three of them trading below their 200-sma.

What could unfold as an alternative is that "the down move to be treated as an A (abc) wave fall to be followed by a B (abc) which will be identified when the price moves past 5525 or 5556. And this might happen with world markets correcting..!!! OR in sync.. shouldn't matter.

I am amazed by your meticulous analysis. I do not do this kind at all. Just looking at the patterns and occasionally measuring the falls/ rises.

Good work. We should be able to know what kind of wave we are in based on the "Intensity of the falls" in the coming days and the amount of retracements.

Best regards.

ilango