DJI wave formation

Where is the DJI heading?

To recap the Wave A formation when the index plunged on Aug 2011. Such movement signals a possibility a trend reversal. However, the Wave Formation needs a long period of signal to prove its usefulness. As a reference, Fibonacci Retracement (dotted blue line) is used to guide the macro-movement of the index.  During a main wave movement (blue and red continuous lines), those lines are another measurement to gauge the probability of the formation. Now, you can see that DJI is trading above the blue line (11800). For a proper wave B formation, this is the resistance level. But trading above might violate the wave B line, it probability looks like a Wave 4 (instead of Wave A) or Wave 5 (instead of Wave B).

Ignoring the wave theory, the TA is definitely bullish when it is above 11,800 and it is a typical "Resistance turn Support" strategy and probability heading toward 12,800.

TA for HSI - Wave Theory (aligned with Fibonacci)

I have relooked the Wave Formation for HSI and trying to align it with Fibonacci Retracement level.  In HSI wave formation, we can clearly see that it had broken 2x Fibonacci Retracement and touched the 3rd support. Initially, I was looking at the gradual formation of Wave B, but apparently, it just went pass the 2nd support 20,000 and drop near to 17,000. Initially, the formation looks like Wave C, but it needs to have a retracement at resistance level to be considered as one. At the moment, it is still missing in formation. Theoretically, this HSI is still in Wave A. The guesswork is now - whether it should have a technical rebound as shown in Wave B - looking for the resistance, before it plunges to Wave C.

TA for SSE (Shanghai)

Wave For Shanghai SE,

In my blog, I try to give you another prospective on traditional charting on Wave theory. As mentioned before, highly subjective and depends on which school of taught that you have learned and apply. In my blog, I research more on Main Wave Theory (which was generalised by all Wave experts) and I incorporated Fibonacci Retracement for the guidance of Main Wave Movement and Retracement movement.

In my week update (requested by viewer), I update the Wave for Shanghai SE index. Where is the Wave direction? 12345 or ABC?

Clearly, it is in Wave 2 (upward trending) but hitting the Support (half way - retracement line of 78.5% or 2574 support). It is definitely not like those of HSI and S&P 500 (downward - Wave B) movement.

In Wave theory, downtrending wave formation is fast and furious. Upward is an long, slow and uphill task.  

Aug 6, Are we heading for a real Correction?

I would like to show my viewers on What is Wave Theory?
It is a predictive technical model to estimate the macro trend momentum. Each Wave (A,B,C and 1,2,3,4,5) represents a specific time frame of the index movement. Each wave will take months to see clearly. Thereby, patience is needed to see this formation.

What is important to highlight is that the 50% retracement of the Wave Length. In theory, using fibonacci  retracement lines, it should breaks 2 support and retrace back 1 support, then continuous to break upward 2 supports and retrace back 1 support. Some even mention about the length of the wave length, but in this case, I uses Fibonacci as my reference lines.

What to take notes in Dow Jones Index, when there was a continuous long candlesticks (see above chart). The down trend wave will break "retribution support line".

In the last 2 weeks,  DJI starts to have this symptom, it broke the support line and touched the Fibo's retracement 78.6% line. This might be the start of "Wave A" Formation.

Read Faber's Comment :  http://www.cnbc.com/id/44031717

If you believe this wise man advice, and you think the Wave Formation of this chart makes sense to you.
You should "SELL at Resistance" when there is a rebound, gradually reduce your position.

TA for STI,HSI,DJI (Wave Theory + Fibonnaci Retracement)

Recently, STI, HSI and DJI are side trending, it is getting difficult to trade. The indicators are giving mixed signal, confusing entry and exit. From TA prospective, they are 2 school of taught. The Science part where everyone uses the lagging indicators. The Art part where you use your imagination to spot patterns.

However, for wave theory application, it has been widely documented and indicated clearly the methods.
The Elloit Wave Theory, the Tubbs and Wyckoff Method are the most popular adopted and practice. In general, the performance chart of DJI, HSI and STI - are correlated.

Something that you need to know, Fibonnaci , Gann and Wave patterns are all prediction tools invented many years ago, it uses the law of nature numerical theory for prediction purposes. If you read more, you will find it very interesting and mythical.

In order to plot the waves patterns, I uses

1. Weekly/monthly chart to simplify the analysis. 
2. High/ Low of Dow Theory
3. Fibonnaci Retracement 
4. Lastly, those length of wave measurement, correction, accumulation, distribution terminology. 

For this exercise, I am focusing on the bigger wave for simplicity.

How to read?

• Wave A, B, C are the down trend formation.
• Wave 1,3,5 are the Up Trend Formation.
• Wave 2,4 are the Side Trend Formation.

Interestingly, waves formation can be seen after it happened. If you believe in those wave formation, then we should be in correction wave 4 and

What are we waiting for?

• A formation of wave 5 - STI must breakout at (23%) 3272
• A false wave 5 - if STI breakout at (38%) 2925 and hit (50%) 2650. = Wave A Formation happening, indicating start of downtrend.