A tale of 4 Ws

The attack on the long running lower channel on the FTSE, using the April lows, was a sign to either trade its cataclysmic collapse or use it as support and look for Ws as the trend reversed.



The first W formed on RSI as shown by the segment but eventually failed as the base on Price didn't hold - can't win them all. A nice high prob. low risk trade BUT it was not to be.

The next one did deliver - standard trade for followers of the system.

Now for the interesting bit!

The continuation W in black. Note the rules for continuation Ws are totally different to those used to find trend reversal ones. Basically forget the RSI level,check the the RSI shape is tight and sharp with good internal gaps and hopefully find a bounce off the MIDDLE Bollinger line. These points have been covered in a previous post.

Since the bounce off the middle line is a key requirement, it acts as the get out level if things do not go to plan. A low prob. low risk trade hoping something unusual happens.

Then something happened that I cannot remember happening before, the continuation W got an extra bit added on its end, shown in red. What I refer to as a Ww shape to reflect the relative sizes but really they are conjoined Ws sharing a common section.

The extra trendline on the Price window was put in to help me locate an alternative closing level should I decide to not use the middle Bollinger line - basically running along the same line anyway.

So now it's just a matter of waiting to see where it goes.

cheers theory