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HIGH PROBABILITY TRADING STRATEGIES FOR ANY MARKET AND ANY TIME FRAME

EXTERNAL RETRACEMENTS HELP IDENTIFY THE FINAL SECTION OF A TREND OR CORRECTION There is a second type of retracement that many traders do not use but should. An external retracement (Ex-Ret) is greater than 100%. The ratios usually used are 1.27, 1.62, and 2.62 and are often shown as percentages rather than ratios. Ex-Rets are made just like the more familiar In-Rets. The external retracements are most useful to identify the final section of a trend or countertrend such as a Wave-5 of a five-wave trend, the WaveC of an ABC correction, or the final section of complex correction. Of course, we never know for sure if a market is making the final section of a trend or countertrend, but if the pattern conditions have been met such that it could be the final section, the external retracements are an important factor to help identify the probable price target for trend reversal. Figure 4.12 is the same USD/JY daily chart used in an earlier APP example but only shows the three external retracements. The 127%, 162%, and 262% external retracements are shown for the A-B range. The two most typical Ex-Rets where a trend reversal is often made are the 127% and 162%, which we always focus on. In this example, the 262% Ex-Ret is above the high of the bear trend section, so it is not relevant to identify the end of a correction for this data. Let’s add the In-Rets and APPs to the chart to see if there are one or two relatively narrowrange zones that ideally include one each of the three sets of projections. Figure 4.13 is the same USD/JY daily data. I’ve zoomed in a bit so it will be easier to see the labels for the projections. The chart includes all three types of price projections

FIGURE 4.12 External Retracements Greater Than 100 %

Profile for ERIC  Hunt

(wiley trading) robert c miner high probability trading strategies entry to exit tactics for the for  

(wiley trading) robert c miner high probability trading strategies entry to exit tactics for the for  

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