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The 5th Wave How To Trade It


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#1
Nouf

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This is last wave in a 5 wave sequence and one where most of the public/retail traders are jumping in, and where the professionals are looking to get out

How to trade it

Once you suspect a 4th wave low is in, then you are looking for a termination target for a 5th wave, you already need to have some common support & resistance areas on your charts, these will help

Then you have generally 2 targets of where the 5th wave would equal the 1st wave or where the 5th wave equals a 0.618 x the 1st wave

What is noticeable as its nearing the trend is the momentum indicators such as the RSI & volume tend to be far weaker than the end of the 3rd wave and you tend to find the most Bullish or Bearish news in the media just before a reversal

You have all seen it Bloomberg and CNBC talking about crashes on the end of a 5th wave, and then getting all giddy and jumping through hoops and cartwheels at the top of a trend, Jim Cramer, telling you to buy stocks when the market has rallied already, its classic 5th wave behavior providing that you can identify you are in a 5th wave

And ideally at the top of a 5 wave sequence the media and clowns on TV are Bullish as you can be, and want everyone to buy stocks etc, and at the bottom of a 5 wave sequence the media is calling for armageddon

Where you want to be getting out of positions is on the end to a 5th wave or scaling out and locking in stops if the momentum indicators are diverging, and even start looking for a reversal to trade, then we start the whole sequence again from trading the 1st wave, as the waves the market creates are all part of building blocks of larger patterns

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