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Wednesday, September 7, 2011

Short USO

Bearish VERTICAL: OCT11 USO 32/34 Put spread

I went short today when USO hit the 61.8% of subminuette wave c target for subminuette wave e, or 34.84. 

Initially I felt there were a couple problems with this trade.  First, there is no clear A-B-C structure visible on the 4H chart (upper), which is my preference for observing minuette degree moves.  Secondly, even on the 1H chart (lower), I do not see a 5-3-5 zigzag.   Nevertheless, price got to my target, so I entered the trade.


Next I decided to look at the actual future, /CL.  I find this fascinating, as here is a clear A-B-C up.  Micro wave ((A)) is a triangle, and ((C)) is a clear unmistakable five wave structure.  


Assuming crude turns down from here as I suspect, the moral of the story is sometimes you just get lucky.  My trade entry was not very responsible since I did not have an easily recognizable A-B-C structure at the time.  Perhaps the other takeaway is occasionally referencing the underlying future.  USO tracks crude very closely, but in this case, the future showed a much better picture.  This game is all about doing everything necessary to see the patterns that are there.
Posted by Waverunner (FractalTrader) at 6:01 PM

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Notation


Wave DegreeMotiveCorrective
Grand Supercycle((I)) ((II)) ((III)) ((IV)) ((V))((a)) ((b)) ((c))
Supercycle(I) (II) (III) (IV) (V)(a) (b) (c)
CycleI II III IV Va b c
Primary((1)) ((2)) ((3)) ((4)) ((5))((A)) ((B)) ((C))
Intermediate(1) (2) (3) (4) (5)(A) (B) (C)
Minor1 2 3 4 5A B C
Minute((i)) ((ii)) ((iii)) ((iv)) ((v))((a)) ((b)) ((c))
Minuette(i) (ii) (iii) (iv) (v)(a) (b) (c)
Subminuettei ii iii iv va b c
Micro((1)) ((2)) ((3)) ((4)) ((5))((A)) ((B)) ((C))