3nd POST THUR 4-19-2007
Now let's look at what has transpired since the first move and pullback to 61% retracement on the 1 hr. It's 10:00 am est. since the pullback did not close above 61% that was a signal for a second wave decline and we now extend out fibonacci line to this new low which is the bottom of bar 1.
A new bounce up started after the close of this bar. We are looking for a bullish pivot to see if this is just a retracement or a bounce.
We did get a pivot and bar 3 is the pivot bar as it closed above the high of bar one which is the measuring bar, and closed above 61% retracement. But notice that it did so on lower volume so this is a pivot and fibonacci break with little strength as per your volume rules so we would classify this upmove as a bounce rather than a retracement.
Bar 2 is 3 bar equilibrium for this move because the two bars before bar 1 are inside bars so we don't count these and notice how price bounced off bar 2, and did in fact bounce back down kind of hard (see bar 4).
Study this action. Back test 3 bar equilibrium on the daily charts. I think you will then better understand that there are three points to balance as I illustrate in the free version of LCM.
Jerry
A new bounce up started after the close of this bar. We are looking for a bullish pivot to see if this is just a retracement or a bounce.
We did get a pivot and bar 3 is the pivot bar as it closed above the high of bar one which is the measuring bar, and closed above 61% retracement. But notice that it did so on lower volume so this is a pivot and fibonacci break with little strength as per your volume rules so we would classify this upmove as a bounce rather than a retracement.
Bar 2 is 3 bar equilibrium for this move because the two bars before bar 1 are inside bars so we don't count these and notice how price bounced off bar 2, and did in fact bounce back down kind of hard (see bar 4).
Study this action. Back test 3 bar equilibrium on the daily charts. I think you will then better understand that there are three points to balance as I illustrate in the free version of LCM.
Jerry
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