Target Zone 1(a)

[immy]

WE are going to make it official now. As you know that 8 out of 10 times wave 4 pulls back between 38% to 50% of preceding wave 3 i.e. simply put if wave 3 was 100 pips wave 4 will pull back around 38 to 50 pips. But you might have noticed numerous times we have wave 4's that don't actually retrace that much instead we see a pullback around 23.6% that is around quarter of wave 3.

We know that 8 out of 10 times a Wave 5 ends between 62% and 100% fib expansion that we call TZ1 and TZ2. So what happens when wave 4 does not pull back between 38% and 50%? Well the answer is that based on our observation and research we have found that in most cases when you see a flat wave 4 that goes sideways and retraces less than 38% and around 23.6%, the following wave 5 may also not touch TZ1 or TZ2. Rather in such cases wave 5's finish around a different number on the fib expansion study that we now call TZ1(a) Target Zone 1a. You can plot that by entering 0.38 value in your fib expansion tool. As shown in the picture.

The Target Zone 1(a)
Wave 5 after a Flat Wave 4. I have established after countless tests that often, after a flat wave 4, we see Wave 5 does not reach TZ1 instead it stops at different level. Instead of expeted 62% of Wave 3 it extends only 38%.

Wave 4 is considered flat when the retracement/pullback is either next to nothing or less than 23.6% fib retracement levels.
Simply Add 0.382 in the Fib Expansion Tool in MT4




Here I'd like to Quote my post from Dec 2013.

The TZ0. You might have noticed some of my pictures have TZ0 TZ1 and TZ2. After some gut feeling, "feeling for the market" and research I have made a conclusion. Its certainly not a Quantum constant but it may increase odds in our favour.
Wave 4 = when it retraces between 38% to 50%. You may even consider it wave 4 if it retraces upto 62%. But in most cases a retrace upto 62% is often a wave 2 of a higher time frame if not part of bigger wave 4. I hope it makes sense, if not just ignore this bit for now.
So, if a wave on eWave is shown as wave 4, and the chart also agrees that this could be a wave 4 after a strong wave 3 but it does not retraces to at least 38% if not 50% it is more than often the case that wave 5 will touch or stop between TZ0 and TZ1. TZ1 ofcourse we all know is Fib Expansion 62%, that means if wave 3 was lets suppose 100 pips, there are higher chances that wave 5, if there is one, would stretch between 62pips to 100 pips and not more .Of course again as we all know if it did strech more than 100 pips then this new wave 5 may be called rather a new wave 3. But if this last bit does not make sense to you for now, just leave it. The important bit is this.

Under normal circumstances when Wave 4 touches areas at least between 38% to 50% wave 5 should usually end between Fib Exp 62% that is TZ1 and Fib Exp 100% that is TZ2. BUT if wave 4 falls short of 38% retrace then chances are that wave 5 may be small as well stopping in the area near TZ0. Now the question is What is TZ0. Well its simply 38% expansion of Wave 3. So if wave 3 was 100 pips without a good 38 to 62 pips pullback (putting it simple numbers) chances are higher that wave 5 may extend only to zone of 38 to 62 pips or rather 38% to 62% of wave 3.

here are some examples of this. I hope this will help you have more odds on your side and help you trade better.

[arjanbg]

I was just wondering with all the great indicators of steve such as the AO and multi fibo lines if we still need to draw fibo lines ourselfs or is it better to look for confulence of important box levels (demand and supply zones) with the automatic drawn multi fibo lines.

[Tomi]

I was just wondering with all the great indicators of steve such as the AO and multi fibo lines if we still need to draw fibo lines ourselfs or is it better to look for confulence of important box levels (demand and supply zones) with the automatic drawn multi fibo lines.

There are many approaches and pick something that suites you the best. At least three comes to mind. 1) When you can see W3 and W4 from the AO, you can draw possible target zone for W5. Automatic drawing uses this approach (to my understanding). 2) When AO shows W3 and it's retracing you can draw fibonacci extension to get possible target zone of subwave of W5 (or possible final ending of current W3, the same thing). This you have to draw manually. 3) Sometimes you can get better looking scenarios when drawing wave starting point from end of wave 2. Automatic approach usually starts from start of wave 1. When you can spot waves 1 and 2, you can sometimes get different target zones drawing manually.

Whether target zones reflect to supply/demand levels, you decide if it affects. Personally sometimes I use this information. For me the most important thing is to check whether there's enough room to go for possible target zone. For example if target zone is before break-even level, there's absolutely no point of taking the trade. If I can get RR 1:2 before target zone and there's a setup, I go for it without any hesitation.

Another thing is focus. I like to keep mind busy by measuring all sort of levels and distances and drawing fibonaccis. I feel like having a better focus like this. For someone else it might be totally opposite.

Fibonacci targets are not a science. We draw those to keep ourselves in tune with the market. There are no exact right or wrong scenarios. In hindsight we can of course see what approach would have been the best one. In the present moment we just have to pick one approach. That approach is to increase confidence to take the setups.

[arjanbg]

[/quote]There are many approaches and pick something that suites you the best. At least three comes to mind. 1) When you can see W3 and W4 from the AO, you can draw possible target zone for W5. Automatic drawing uses this approach (to my understanding). 2) When AO shows W3 and it's retracing you can draw fibonacci extension to get possible target zone of subwave of W5 (or possible final ending of current W3, the same thing). This you have to draw manually. 3) Sometimes you can get better looking scenarios when drawing wave starting point from end of wave 2. Automatic approach usually starts from start of wave 1. When you can spot waves 1 and 2, you can sometimes get different target zones drawing manually.

Whether target zones reflect to supply/demand levels, you decide if it affects. Personally sometimes I use this information. For me the most important thing is to check whether there's enough room to go for possible target zone. For example if target zone is before break-even level, there's absolutely no point of taking the trade. If I can get RR 1:2 before target zone and there's a setup, I go for it without any hesitation.

Another thing is focus. I like to keep mind busy by measuring all sort of levels and distances and drawing fibonaccis. I feel like having a better focus like this. For someone else it might be totally opposite.

Fibonacci targets are not a science. We draw those to keep ourselves in tune with the market. There are no exact right or wrong scenarios. In hindsight we can of course see what approach would have been the best one. In the present moment we just have to pick one approach. That approach is to increase confidence to take the setups.[/quote]

First of thank you for awesome answer . I like your suggestion to draw them to be focused and helps me to be in tune with the market. I understand that Fibonacci are guidelines which creates levels for the human emotions of fear and greed in the market. Using supply and demand zones for looking if there is enough room for prices to move and therefore create a good R:R for taking a trading is a really good suggestion, immy Always says that in his videos.

What I still struggle with is to Recognise the 1-2 setups. I also notice I tend to be late in a trend after or at the end of W3. To use the fibonacci extension for determining the end of W3 is a briliant idea ^:)^ , never thought of it. Do you have tips to spot 1-2 / a-b setups. I only know that Bill Williams talks about sausage buys based on the AO (SO lightgreen signals on AO ) indiactor http://www.google.nl/url?sa=i&rct=j&q=& ... 8663701336

Immy also talks about the monarch pattern, which remind me of the same principle in the market. The idea I have how to spot them is see a monarch pattern with a open gator, then go down to a significant lower timeframe. At this timeframe look for a sleeping gator and a thight AIMS box. What I am descriping is the famous setup (afcourse also can be used for W4 to W-5 aswel). Is that a good idea to get in a W3 or would you recommand other ideas.

I also was wondering if the Fibonacci extenstion tool can be used to set targets for W3 and PC. I know use the Fibonacci retracement tool for that and make a target zone between 1,61, 2 and 2,61. Then I look for confulence to other supply and demand zones and high lows of the multi fibo lines SNORM tool and set my TP level.

[acceleratum]

The Fibo is most accurate to find end of W4 and end of W5 (target zone)
Draw from beggining of wave till top of 3 with fibo retracement gives you the possible levels where 4 will end, when it ends and starts going into 5, fib expansion gives you the target.
The deeper w4 retraces, the more likely it will hit tz1 or blow past it, ideally you want 38.6 or 50% retrace.
Now this is simple and it works.
Snorm ewave does it automatically for the current wave, the new ewave harmonics has extra options to show the previous waves fibos, and retracements as well..

[arjanbg]

I like your saying that if it deeper retraces to 38 or 50 level there is a higher chance of hitting tz1 (*) . Because i also notice that it happens that w4 ends around 23,8 level

[acceleratum]

The purpose of the original post is that whe it doesnt retrace enough or less than the 26, it then wont reach tz1, and the according settings will give a shorter target.

[arjanbg]

The purpose of the original post is that whe it doesnt retrace enough or less than the 26, it then wont reach tz1, and the according settings will give a shorter target.

what target would je recommand then, the top of the box or top of W5. Or would you just filter the trade out and wait patiently for a better setup B-)

That depends what stage your on, from the questions I assume stage 1, so your focus is discipline, then you go for 2:1 RR , if there isnt enought room for target, skip. That is a filter in the flowchart and filters filter trades

[immy]

The purpose of the original post is that whe it doesnt retrace enough or less than the 26, it then wont reach tz1, and the according settings will give a shorter target.

what target would je recommand then, the top of the box or top of W5. Or would you just filter the trade out and wait patiently for a better setup B-)

That depends what stage your on, from the questions I assume stage 1, so your focus is discipline, then you go for 2:1 RR , if there isnt enought room for target, skip. That is a filter in the flowchart and filters filter trades

I'd like to quote one line from your previous post

What I still struggle with is to Recognise the 1-2 setups.

If the above is true. forget everything. Get that right first.

Watch the Flow Chart video. all other videos related to Setup 1/2 and Setup 0 in the flow chart video.
once you get that right, by applying T20, (5 batches of it) you will then look at Tz1 fib etc etc. hope this helps

[arjanbg]

What I still struggle with is to Recognise the 1-2 setups.

If the above is true. forget everything. Get that right first.

Watch the Flow Chart video. all other videos related to Setup 1/2 and Setup 0 in the flow chart video.
once you get that right, by applying T20, (5 batches of it) you will then look at Tz1 fib etc etc. hope this helps[/quote]


I will watch the video again and start a T20 Campaign and start a journal. And by watching the video you probaly mean http://www.itradeaims.net/forum/viewtopic.php?f=7&t=355 and http://www.itradeaims.net/forum/viewtop ... =87&t=1037 correct?