Dec 152008
 

A lot of traders are under the impression that technical analysis will give  cut and dried answers to their trading challenges. Many of those who practice Elliot wave analysis also have this notion. How I wish life was so simple! All that technical analysis does is to give you a structured approach to the market. It allows you to enter the market at levels where you can define your stop loss levels, and take an informed view about how far the next move can go. It is ALWAYS an exercise in probability. As you gain experience, you become better at the game, and make less frequent incorrect calls. A good wave analyst is not so much concerned about incorrectly labeling a move provided he has the ability to ‘think’ on his feet. ie. he constantly adjusts his count as the market sends him new signals. Even if he identified the end of a trend incorrectly, he would have made the correct call about the likely next direction, unless he was ‘wrong – WRONG”.

With that short background, I present you the chart of Citi, showing how I labeled the end of the trend incorrectly on 3 different times in the past, yet ended up making money. (The one time I lost was when what seemed like a diagonal triangle turned out to be something else, but even that gave me a decent level to exit the following day)

citi-15-dec-08

  No Responses to “Identifying the end of a trend: Citi”

  1. Ramki,

    So if I read you post correct, you still think C may fall into the wave with this last dip? I have been following C and your posts for many months now and have been extremely patient taking small gains here and there waiting for the big payout… Any additional insight would be appreciated!!

  2. I think there will be one final dip in Citi that need not necessarily go to new lows. After that we should get the first real rally that will take it initially to the most recent high (marked iv). After that we will get one small dip of maybe 50% of that rally and that will be all. Thereafter, we should buy Citi on every dip. But first, let us wait for the current decline to run out of steam, and we will already get some clues on the way. I will keep the blog updated as we go along! Good luck.

  3. Thanks Ramki! Do you subscribe to this being minor 5 unfolding of 3 or to my preferred count that we are in a zig zag of intermediate 4 ?

  4. Sorry David, I need to see a chart with your counts on it before I comment. (Sigh. It has been a long and tiring day here). Send me a link, or better still, post a link here so others can also see what we are discussing. Thanks.

  5. Hi Ramki,

    Do you think Citi is a good buy at current level of $7? Appreciate your thoughts.

    Thanks,
    Kaushik

  6. Hello SK, No. I don’t think buying Citi at $7 is a good idea. We will likely see a move down to around $5.50 and let us consider the picture again at that time. Best. Ramki

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