Do rapid market turns make you feel like a doomed contestant on a Think-Fast game show? You have to be totally prepared and "on your toes" to stay ahead of this unforgiving game. And that means understanding the rules before you get started.
If you're not totally confident in your knowledge of technical analysis and the Wave Principle, there's no time like the present to refine your technique.
This question looks at a weekly bar chart for Cocoa, excerpted from one of Wayne Gorman's sections from our online course:
How to Trade in a Fast-Moving Bear Market (a new session starts soon -- details available
here>>):
How confident do you feel in your answer, if you have to make a quick choice? The timer is running out…
Here's Wayne's explanation of how to find the correct answer:
Now, choice A is of course wrong -- you do have enough information to make that determination.
Choice B… No -- you can see that wave (3) is already extended. It would be rare to have two extended waves. It's possible that wave (3) and (5) could be extended, but that we only see that at higher degree, and we do not see that often. So that's not what you would expect to happen. That's something that can happen.
Choice C… Well, yeeeeaaaah, it's possible -- but you wouldn't expect that. It's true that after a strong 3rd wave, you might see a truncated wave (5), but your first choice in this situation is to look for wave (5) to equal wave (1), or equal a Fibonacci ratio of .618 times wave (1).
So [option D], no, it's not likely in this situation -- you're not likely to have two extended waves.
The correct answer is E.
Did you answer correctly?
If you still need practice with pattern recognition and counting waves, our seasoned trader-analysts Wayne Gorman and Jeff Kennedy can help -- with interactive exercises, clear instructions, and live feedback in their 8-session online course,
How to Trade in a Fast-Moving Bear Market.
Gain more opportunities to review and ask questions about the Wave Principle, in
any market, all from the comfort of your home or office.
Follow this link to learn more>>