1- CONFIRMING TREND DURATION
A trader’s success in trading a Secular cycle/3+4 Extension is directly related to utilizing max opportunity out of the longer-term 4-HR cycle and its projected duration.
1- Individual Cycle recognition in terms of wavelength (time) and amplitude (profit projections), becomes a key METRIC, in choosing the issues to prioritize investing a 1x4HR strategy in, and are confirmed out of the higher degree daily frame.
2- Trade efficiency through increasing the number of trade entries that can be profitably recurred in a 4-HR trend is also key to profit accumulation. This METRIC directly relates to trading retractions in the 1HR Cycle, and immediately stands out of Higher reversals once they ensue in THE 4HR MOMENTUM CYCLE. (See Past Example/3).
A 4-HR TREND is what the strategy is acutely trading, once it reverses, the trader must be out.
Both of these measures will be our acute focus in the coming example.
The Current example focuses on how to trade only trending issues, even when such issues are in a dormant mode, but expected to break out. Such trends will be termed here “Secular Trends”. Secular Trends usually extend into 9 Months (3 Quarters).
Under the abstract section (beginning article), one of the primary ten nets for strategy/3 trend trades was:- that momentum on the daily frame must be predominantly trending. Chart/A is a daily for the Us Tech-100, (NASDAQ), and shows a predominant bear trend daily.
At zone(A), due to the continuous negative momentum plot, the trader recognizes a secular bear trend extension on the daily chart. And would attempt to get into it & hold it to its maximum duration. As shown in chart-A, that trend lasted for 21 days. To enter into that trend, the trader would simply take a 1X4HR trigger and continually implement a Cycle/3 strategy trading it until a longer-term target at an (S2) support pivot on the 4 HR frames is reached.
Chart/B shows the moves that would have been traded using a Cycle/3 strategy (as per past examples), by simply trading 1x4HR triggers inside of the larger secular trend. The trend duration for such moves was typically 3 days (red down trending arrows on Chart/B). The strategy was effective because it allows the trader to go out of the market immediately on a 1HR X 15 Min adverse trigger, by hedging. One such 1Hr X 15 Min trigger is shown on Chart/B.
Had it not been for the adverse 1HR x 15min positive trigger in between, the whole duration for the trend would become 45 days. Had traders been implementing a Cycle/3+4 strategy for the full duration, They would certainly increase yields multifold, even with an adverse 1HR X 15min positive trigger in between the trend duration.
Our current example will show how to treat such adverse volatility to a trending move, and trade an amended/fine-tuned cycle/3+4 strategy throughout the overall higher degree Trend, to maximize trend duration & yields.
TRADE IMPLEMENTATION – EXTENDING A CYCLE/3
On Chart/C the eruption of a positive 1x4Hr Momentum trigger, (green arrow on Chart/C), marks the end of the 1st leg of the extending downtrend.
At this point, a typical Cycle/3 trader, should be able to hedge his way out of the “remaining” short entries, and reverse into longs, and implement a Cycle/3 strategy long. This implementation has been shown in previous examples and is not of interest to us here.
It is after the completion of the bullish correction, labeled -4(red) altogether, and as price and momentum become directionless (See Chart/C), that the trader becomes indecisive and apprehensive until another 1x4HR cycle/3 trigger erupts. (Red arrow marking bear trend trigger at (–b) on Chart/C)
Once such a 1x4HR bearish trigger erupts, the trader is confirmed to start trading in the bearish direction using a Cycle/3 strategy.
The trader would be now tempted, to trade the whole move down for the possible coming 45-day duration, similar to the past downtrend in wave/3- red, using a Cycle/3 methodology – (See Chart/B). On Chart/C such a move turned out to last only 21 days, as it turned out to be an identical fractal of the previous “Wave-3-red” but labeled in (Wave-5-red). Nevertheless, the move is certainly worth continually trading and allocating a specific percentage of the trader’s account.
TRADE IMPLEMENTATION
Trade implementation starts, once a 1HRx4HR bear trigger erupts close to the oversold level on the daily chart at (-b red). See Chart/C.
Traders could be tempted to begin trading on a 1HR x 15Min bear trigger. This is ill-advised. Usually, a level (1) would not have been taken out yet on such a dual trigger, and the market can still bounce out of a Level(1) support in this case, into a wave-4c. (see Chart/D). The trader is best served by adhering to 1x4HR triggers.
Chart/E now shows the trend extension and its projections that the trader will be implementing a Cycle/3 strategy on.
Now to actual trade Management
Confirming a Cycle/3 Trend on 1&4HR
Chart/F shows the 4HR Cci trending <-100 for about a 1-month duration.
The Chart marks where the 100-period Cci on the 1&4 HRs run in confluence below <-100, (dark red zones), and where the Cci on the 1HR diverges (moves higher > -100) from that running on the 4HR.
Because 1HR momentum retractions are contained by the 4HR negative momentum run, Trend continuation is Confirmed.
Shorts can be continually engaged for the whole period, and a fine-tuned 1×4 HR momentum confluence (Cycle/3+4) strategy can be used.
Chart/G marks zones where 1HR momentum rises >-100, (grey arrows). The Chart also records where 1HR momentum records positive values > +100 levels (yellow arrows), (see-Chart/G), All such instances do not record any rise in momentum on the 4-HR frame >-100 or at -100, Chart/F.
On Chart/G, and as already illustrated in the past example, Rises > -100, in 1HR momentum get contained at or below 1HR pivots in the index value. – See Chart/G.
Whereas Rises > -100, in 1HR momentum that break above > +100, or gyrate in a prolonged histogram between zero & +100 lvls, record higher degree corrections, in the structure relating to the higher degree Elliot channel (a leading diagonal in this case), and get contained at or below (R2) on the 1HR chart, and definitely below a higher degree wave-i /(1) – if the trend is to continue. (Tenant for trend continuation – Elliot). See Chart/H.
Such a higher degree correction (positive momentum on the 1HR frame), will trigger a hedge to open once the “fixed Risk Pitch” is violated on the 15-min chart.
The level of hedge engagement is usually on breach of a wave(iii) /(3) on the 1HR frame, and the breach fails at a level of wave(i) / 1 of the motive wave– See Chart/H
ENTRIES & PROFITS – (Cycle/4)
Because the trader is confirmed of an extension in trend continuation through consistent momentum extending below -100 on the 4HR Frame. There arises a trade opportunity to sell the pivot (p) on the 1Hr, and resistance pivots related to that zone on the 15Min frame, and take profits on the next lower pivot (S1) on the 1HR frame. – See Chart/I.
A stop or hedge order to counter protect the short entry is placed at trader’s discretion, one resistance level above entry level.
On the shown example, 2 trades are achieved over a 12-day duration. The win rate is 100%. (See Chart/J). Such trades are typical trading of a Cycle/4 into a trending Cycle/3, or for simplicity :- Trading a Cycle/4+3. Note that during the trade 4+3 duration, cycle /3 trades also trigger, compounding the profits made on the move.
Similarly, because the trader is confirmed of an extension in trend continuation on the 4HR Frame. There also arises a trade opportunity to sell the (R2) on the 1Hr, and resistance pivots related to that zone on the 15Min frame, during a higher degree correction. Take profits at the next lower pivot (S1) on the 1HR frame. – See Chart/K.
Note that in this case, because a hedge had been opened to protect already held (running) shorts, this hedge gets closed at break even once a trigger effects again on the 1HR frame.
Another stop or hedge in order to counter-protect the short entry is placed one resistance level above the entry-level.
In the shown example,(Chart/K) one trade is achieved over a 10-day duration. The win rate is 100%. Note that during this 4+3 trade duration, cycle /3 trades also trigger, compounding the profits made on the move.
Pragmatic entries can also be taken and recurred several times a day in a typical cycle/3 strategy previously explained.
These are shown on Chart/L. On the shown example, 7 trades are achieved over a 12-day duration. The win rate is 100%
