Matching Daily and Hourly Charts

In my endeavor to apply EW to the smaller degree and attempts to co-relate and amalgamate the Hourly counts with Daily counts,I have encountered quite a few pit-falls.Trying to share some of these with my friends here so that all of us can benefit:

1. Main benefit of following Hourly charts is the grasp that one gets over the fractals and it gives immense assurance to the Counter of being "in the know" of the things -- entering the trade at "correct" points,carrying on with the positions and squaring them off when the Fib percentage and wave forms match.

However,in case of gap-up/gap-down openings, Hourly charts give the feeling as if one has got lost. One or more of the small degree fractals gets assimilated in the gap and the (smaller degree) count goes for a SIX , forcing the Counter to rush to Daily Counts and find out where he stands.

Thus I always give the Hourly Charts and EOD Charts to help EW enthusiasts to overcome this particular problem ---

2. And now lets see how these two can be complimentary to each other. While Daily Charts show that minimum required criterion for sub-waves have been met, Hourly Charts help us pin-point whether the wave has run-up to its complete length or not.

And lets take the Current Count( which would be most relevant):

The Current Downmove from 5400 is being labelled(most simply):

SW1=5400-5205=195;

SW2=5205-5326=121(62%);

SW3=5326-4990*=336-- has now done 172% of SW1(more than the minimum 162%)

So the upmove from 4990 should be SW4 and do (ideally) 38.2%=129=5118

But is SW3 really over? Because 162% of SW1 is the minimum requisite,maximum can extend to 425%.

Here the Hourly Chart comes to our help:

This SW3 has to fan out as a five wave form,of which discernible ones are:

(i)=5326-5142=184

(ii)=5142-5229=87

(iii)=5229-4990* in play and should, ideally be going to 1.62*(i)=4930(minimum)

Thus, if matched properly, the Hourly and Daily charts can become very useful guides for carrying on or squaring off our trades.

AND NOW THE DISCLAIMER:

It has been noticed umpteen number of times that momentum whipsaws the Hourly Charts(its extreme form being the gap-ups/downs mentioned earlier) and, therefore,it is always better to prefer EOD Chart over Hourly Chart.

In the current context also we may find the SW3 not going to the lengths indicated by Hourly Charts( and the daily charts shows the minimum criterion to have been already met) so be cautious with your Short positions and use hedges/SLs accordingly.

Raghu