Is that an ABC correction or a new motive wave up?
This is the sort of question that we traders will be asking ourselves all the time. Get it right, and you're at the very start of a big move; get it wrong, and you have a losing trade - but that's a trader's life. Sometimes we just have to make a judgement call, to get a nice trade.
Looking at the chart, you'd rightly say that price has been in a down-trend since the Frankfurt Open (the green line at the top of the chart) and that the bears are still there after the London Open (gold line).. So, surely this last move up must be an ABC correction?
Before deciding, you need to have a bigger picture in mind. The H1 chart provides that bigger picture, for us M1 traders, and before the London Open we already had the H1 blue TZ1 in mind for our longer-term target ... we're looking for an opportunity to go long. When price hit the cluster-cluster that had been drawn the day before, using the recent H1 moves, we had a good idea that a base had been found. The move that followed looked very impulsive - are the bulls now in control?
This is what followed ...
Price corrected, gave us a TLB, broke the last swing of the correction and didn't look back.
I was a bit surprised to see the FO supply zone broken so easily but we knew that once that had been dealt with, we have a good place to lock profits and let the trade run. I had to go out for the day, so set my TP just below the BBRN and left price to do its thing - a nice +8R return for when I got back, late afternoon. Nearly 12R was on offer, if you stayed with the charts to manage the trade to its conclusion
This trade, from the start, was discussed with some trading friends and I know I'm not the only one that benefited from that terrific move on DAX.
By the way - there has been another update to eWH this week, to keep gaps on the chart that were only just closed. This enabled some of us to find a long trade all the way down here (red arrows) ...
I'm often asked how to get in at the start of eWH 3 ... well here are just a couple of examples, on DAX M1 this week. You have to make that call: "is it an ABC correction or a Wave 1?". Look for solid support/resistance, have the bigger TF in mind, fill your boots.
Trading is made easier with eWavesHarmonics and the Advanced Trade Manager; check out the Trader Training Course to learn how to find these trades on any timeframe..