Welcome to the first showcase page hosted on wave59.com! This is a continuation of the older pages at marketanalytics.net (which are all available in the archives), brought back due to popular demand. Wave59 contains a huge number of unique technical tools that most traders are unfamiliar with, so there's a lot of ground to cover.
Let's begin with a look at my personal favorite, the 9-5 Count. The idea behind this indicator is to uncover price cycles in markets. Many people have spent a lot of time and energy looking for repeating cycles in the market, but no one to my knowledge has ever been able to find static cycles in time. But if you take a look at price, and ignore the time element, you can find quite a few very powerful cycles that don't ever change. The 9-5 Count is designed to track these cycles, and gives you two very important pieces of information:
A half-cycle in the market ends on a red or blue 9 (or 8* - which is good enough). If the current cycle is stronger, we can go to a full cycle, which consists of a red/blue 9 plus a gold 5. This is where "9-5" comes from. It's one cycle. After we hit 5, we start over at the beginning and look for another 9. So the pattern alternates 9-5-9-5 etc.
Turning points can happen whenever we hit a 9 or a 5. These are places where the cycles lose strength, and trend changes always happen near one of them. Of course, in a strong trend you might have 2 or 3 full cycles stacked end to end, so you've got to be a little careful about confirming the signals.
Let's take a look at a chart:
There are other indicators here, but just look at the 9-5 Count for now. You can see how the market flows from one cycle into the next, with the turning points coming in at the 9's and 5's. Once again, an "8*" is just as good as a "9".
Now to the other tools. The pink line at the bottom is the Ultra-Smooth Momentum curve. Divergence between this curve and price are shown by red trendlines. When price makes a higher high and momentum makes a lower high, that's bearish divergence. When price makes a lower low and momentum makes a higher low, that's bullish divergence. So you look at the highs to sell and the lows to buy. It's extremely accurate, and probably the ultimate confirming tool.
The dashed vertical lines are where various planets rose, transited, set, or opposed the geographical location of the New York Stock Exchange. These relationships are always very interesting to watch on a 1 minute chart.
Leading up to this point, the 9-5 Count was moving at half cycles going 9-9-9-9, etc. This is very common. Note the momentum divergence at the high of the day.
This swing represents a full price cycle. Notice how we went through a red 9 and gold 5 above price.
We've got bullish divergence and a blue 9. This is the first clean signal today from these indicators.
This is the top of a long, very choppy up-trend. Note that there were 3 1/2 cycles of 9-5 leading to the top. This type of thing can also happen in strong trends, and is the reason for using confirming indicators. There were two sell signals generated by momentum divergence, but there was no confluence between indicators. Remember, one indicator is never enough to take a trade.
This is an example of the kind of trade to look for. We've got a blue 9, bullish momentum divergence, and Jupiter rising. These are three totally unrelated indicators, yet they are all saying the exact same thing. This is the key to making this all work profitably. As it turned out, this signal caught the low of the day within around 3 minutes of time.
So even though we are looking at a 1 minute chart in this example, there was only one good opportunity in the entire day (Point F). There was no other time when all three indicators came together like that. It's tough to sit on the sidelines and wait for the perfect trade to form, but that's what is required if you want accuracy. In this case, we could have bought the low of the day, which is always fun to do.
The way to make things more interesting is to add a couple other indicators, making sure that they all measure some different aspect of the market. Never use more than around 7 of them at once, and always make sure at least 3 are confirming each other before you place a trade. If you only use 3 indicators, you might only get one trade in a day on a 1 minute chart. If you use 6 indicators, you might find 3-5 trades. But if you make sure your indicators are totally unrelated to each other, and that they are all accurate when used alone, you'll find that those 3-5 trades make up in profitability what they lack in quantity.
Thanks for reading, and stay tuned!
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