Here is a quick blog from our Live Trading Room host, Dan Hussey. Take a look at how to manage your risk by using inflection zones to your advantage. The Live Trading Room is held daily from 11:30 AM EST until 1:30 PM EST, join Dan there for more insight into these proven methods of trading.
The $ES_F (SPX futures) traded its equal legs inflection zone in a three wave corrective Elliot Wave structure. We highlighted this area as the next potential resistance for the SPX in previous Live Trading Room (and in the daily recap for subscribers). The 1884 inflection zone was also the unfilled gap from Thursday, May 15th.
$GBPUSD 240 min – Equal Legs and 50% Inflection Zone:
Last week, we followed the inflection zone bounce from the 1.6750 area in the GBPUSD. This area already provide a free trade setup to members of the Live Trading Room, as it was highlighted well before it actually traded. One of the major concerns we had in the room is that the resulting bounce’s structure may have only been a “B” wave, thereby being fully retraced and a new low made. This turned out to be the case, and the GBPUSD confirmed it was needing a deeper pullback. While those that are already long from 1.6750, and have already gotten free, are still in a valid trade setup, the GBPUSD is suggesting it will make a terminal low next week into 1.6650 to 1.6630 inflection zone. Even though that original setup may end up being stopped, it will not be for a loss, and this is the core value of trading inflection zones… when executed properly, you are giving yourself a long term statistical edge and a method of defining low risk high reward setups. Invalidation for the technical trade is below 1.6530, and the T1 (first targets) are at 1.6720 (we look to take 1/2 the position off at the T1). Targets should be achieved on a rally to the green target area (-61.8% for the equal legs, and -23.6% for the 50% entries) at 1.7100 and 1.7170 respectively. For daily commentary and additional trade setups, join our Live Trading Room, held daily from from 11:30 AM EST until 1:30 PM EST.
$GBPUSD 240 min – Elliot Wave Structure:
The GBPUSD is pulling back in a three wave A-B-C correction. This type of corrective Elliot Wave structure is often defined by the A and C wave being in equal length. While Elliot Wave is the “map” we use to navigate the market, technical price measurement is the compass and protractor used to confirm our bearings. GBPUSD has provided the minimum structure to be three legs down, however, price measurement suggest one more low is highly probably (with valid trade setups to be taken as well).
We utilize Elliot Wave in conjunction with technical’s to provide the best Elliot Wave Analysis of the markets. Remember, trading isn’t about how much you make, or being right, its about managing risk and how much you DO NOT LOSE!
Regardless of larger Elliot Wave structure or trends, inflection zones have a high probability to trade from their ENTRY areas to their T1 (first target: the the 76.4% line for equal legs, and the 38.2% line for 50% fibs). We exploit this statistical advantage by using this inflection to manage our risk, while looking for setups in the direction that the EWF Elliot Wave charts suggest. For daily commentary and updates on trading Elliot Wave and Technical Inflection Zones, join us daily from 11:30 AM EST until 1:30 PM EST, in the LIVE Trading Room Webinar!.