GKP

Diver, as far as I know there's no requirement in EWT for RSI divergences. They are commonly seen between waves 3 and 5 of same degree but there's definitely no "rule" that there must be a divergence.

In any event, and to pick up on a point raised by Wreckless Eric, if we assume that wave 1 was 4.5p to 21.5p was wave 1 (which I'm 100% sure of personally since it was a rise of over 300% and 4.5p was the low SP) then there is a weekly bearish RSI divergence between the 130.5p and 202.75p peaks giving you a wave 3/5 divergence there and also a daily bearish divergence between the peaks at 161.5p on 20/09/10 and 202.75p on 3/11/10 which are the subwaves 3 and 5 of larger wave 5.

It's only if you assume that 450p (465p for some charts) was the top of a 5th wave with the 3rd wave top at 202.75p that you don't get the weekly RSI divergence. In fact, there was a divergence at 450p on the daily chart but only between the subwaves of the move from 87p to 450p.

In addition your wave A from 4.5p to 450p has 5 subwaves as part of a zigzag if I'm not mistaken. If that's the case then by your own argument you'd have to have an RSI divergence between 202.75p and 450p which you haven't got. Your RSI divergence requirement would have to apply to an impulsive wave A and C just as it would to a wave 1, 3 or 5 which would imply that 450p must be the top of a wave B, 2 or 4 so either way it cannot be an A if you insist on your RSI divergence.

I fully agree with WS that 202.75p was the top of Primary wave 1 and, for me, the debate is really all about the post-202.75p moves. And on that note....

WS, I have seen that possibility raised before ie that 450p is the top of a wave B in an expanded (irregular) flat. Certainly on a log scale chart it's looks much more possible. A coupe of points on this possibility:

1) Flats, due to their bullish nature, are almost always in a wave 4 position. Here we're discussing a possible Primary wave 2;

2) In an expanded flat, the wave C usually ends more substantially below the wave A low than in a "regular" flat which suggests a wave C low comfortably below 87p assuming this to be the correct count;

3) There's a third possibility if this is a flat (which, according to point 1 above seems unlikely to me) - that of a running flat. Of the 3 flat varieties, I think this would be the most likely by virtue of how far beyond 202.75p the SP went. The running flat is very rare and has a wave B top well beyond the start of wave A and also has a wave C which fails to go beyond the wave A low. Could this be the case here?


We'll only ever know the answer to this question after the event of course but we do seem to agree on this being in a wave C of some corrective sequence or other, and in subwave 3 of C at that. I certainly can't see any complete corrective wave count at 131.5p and the pace of the drop below 161p is in keeping with the strength of a wave 3.

Going back to diver's RSI point (and I do agree that there is usually a divergence between 3rd and 5th waves, just not that it's a requirement), the reason we often see bullish RSI divergences at the bottom of downtrend is precisely because wave C is usually an impulse wave with a 5 wave sub-structure so we get the divergence between the 3 of C and 5 of C. This is one reason why I was always sceptical about 141p being the low of the drop from 450p - there was no divergence.

IMHO we will get a bullish divergence at the bottom of this move so that may well be our first clue for a reversal. For now, though, 161p is now the key number as that seems to be the low of wave 1 of C down. If that's the case then any wave 4 of C ought to stay below that (there is a case where this doesn't have to hold true - an ending diagonal) and a 5th wave down would be likely to drop below 131.5p. A close above 161p would likely signal the drop is over and we'll have to re-visit the wave count all over again.

Have a look at the following weekly chart:



dl.dropboxusercontent.com/u/20815047/GKPweekly26_04_13.gif

Note the support at 119p from 4th Oct 2011. If that holds for the low of wave 3 of C then the 38% Fib (most common for a wave 4) happens to be at exactly 161p. A wave 5 of C equal in length to wave 1 of C would then find support very close to the 64p support from the 2010 low. Just something to look out for but worth noting I thought.

I'll continue to look for more bullish cases but I haven't been able to see any convincing ones yet. Remember, 161p is now a key level.

Jolly good evening all, just scanning through the wave chat I have not noticed 88p mentioned a lot. The reason I ask, (I have a strong sense that the P&F targets give a strong hint of which fib ratios to aim for, for those who use updata and have access to the P&F charts, if you use a 1% x3 log chart, the time frames of 5, 10, 15 and 30 mins along with the Weekly all have 86-89 active targets.





I would feel a little more assured if I could get a fib to line exact!!! and I cant!

Thank you

ft

Thanks J some good a valid points.....

1) Flats, due to their bullish nature, are almost always in a wave 4 position. Here we're discussing a possible Primary wave 2;

Here is where we need to be objective... this is not a rule a myth maybe but can happen in 2's

in between 1980-90 on the dow and spx both displayed a wave 2 flat, what followed that correction was an earth shattering uptrend - with dow rising 8/10000 points. the other known w2 flat on dow was back in 2006 bottomed at approx 10683.... i'll try to get a chart to reflect at some point....

in my view a flat is flat whether regular or irreg nature. expanded or running flats by definition what are they exactly -are they just another terminology for complex nature of the structure?

For ref:




moving on to 161 - yep agree with you on that.. pivotal area.

i guess we'll just see how it goes from here on in... however things are starting to get a lot clearer for sure. either way the likeness on what follows after this correction, must not be underestimated imho , all we can do now is observe price action, look at indicators, volume, divergence, candlesticks at key area's that many have time and time mentioned so far and pick yer spots - so credit to all contributors.

as always feedback welcome, together we're all generating some sensible, respectable debate.

clearly no one is perfect, but together we can develop a greater understanding to get to a place where things start to look a lot clearer and cleaner from TA perspective.

regards WS

FT - do you mean you have seen 88p mentioned a lot rather than not ?

88p is spot to watch.

Thank you for responding Wavesurfer

From a wave target point of view I recognise the 100 level and 65 level (sorry not exact figures) are important.
I recognise how significant 87 is from a straight forward support level.
My query is, is there a fib ratio which corresponds with the 87 level?

Hi ft,

The only "fib" I can fit to 87p is the 100% retracement of the whole last rise. It has been discussed but not specifically as a wave target though it is a possible one - a bounce off the monthly cloud base at 103p (there's a 78.6% fib at 100p too) could point to wave C ending c. 87p. No doubt it's a key level and I've seen those p&f targets too, plus the 56p one.

WS; agreed on all points. W2 flats are rare though. I'll have a look at the Dow ones in the morning - thanks for pointing them out. Having such a bullish form in a wave 2 position certainly ought to be followed by an extremely strong 3rd wave so that fits everyone's hopes and dreams if nothing else lol!