Power Wave Forex

This technique is created by a Singaporean, Dr Wong from his trading research for 12 years in Bank of America (singapore) and it has recently been trademarked. The uniqueness of this trading system is that it can also be applied to other markets such as bonds, commodities, stocks, etc.

This technique is like an upgraded version of elliot wave, Harmonic trading, Michael Gur & Goodman Swing Trading, and also Dow Theory.

The labelings are: X (big X),A,B,C1,C2,J,K,L1,L2,L3.1,L3.2. At certain cases especially on daily timeframe or above, we could have additional expansion waves: x (small x),Y,Z before we found a meaningful change in trend.

From what I learn, it seems this trading system only needs:
1. SMA 4,9,20 by Closed for Daily chart. Just for a confirmation whether the current trend is still exist or not.
2. Stochastic Oscilator (5,5,5) on M30 chart. Used for divergence or exit.
3. Fibonachi Retracehement:
3.a. 33,33%
3.b. 50%
3.c. 66.66%
3.d. 80%
Where the most significant ones are 66% & 80% for entry position.

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There are some rules:
- Rule #1: If we draw a fibo retracement from X to A, then A to B should be at least 50% for "B" to be considered a valid point "B". That is for TF: monthly, weekly, & daily. Special case for M30 timeframe. The "B" could be only at least 33% although 50% would be better. However, A to B must not more than X to A, because X is the place where we put our stop loss. For a down trend, X and B are above, and point A is below and point X should be above point B. Vice versa for an up trend.

- Rule #2: There are 3 places where we can enter the market:
--> if price breaks point A (such as according to Dow Theory)
--> if price is around 66% retracement
--> if price is around 80% retracement (rare)

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- Rule #3: Stop loss is several pips above point X for a down trend or several pips below point X for an up trend. If point X is breached, then there is a violation, the whole labeling for current time frame is incorrect and needs to be remade.

- Rule #4: Take profit: 2 times of point X to A counted from point B. Or, for those who enter the position using M30, close the trade manually after 2-4 days, but the TP is not reached yet. For Daily timeframe, close manually if 9-13 days.

- Rule #5: Point X is the core and the genesis of Power Wave labeling. Once point X is violated (stop loss is hit) all labeling for the time frame that the X is violated should be erased and remade. However, although it retraced very wildly, while point X is not breached, than the labeling still continues.

- Rule #6: Point X, A, B, C1, C2, ... etc on monthly timeframe are candidates for point X in lower timeframe (weekly). All labeling: X, A, B, C1, C2, ... etc on weekly timeframe are candidates for point X on daily timeframe. All labeling: X, A, B, C1, C2, ... etc on daily timeframe are candidates for point X on M30 timeframe. And M30 timeframe is the place where we enter the market.

- Rule #7: Labeling, should be started from the biggest time frame to the smallest timeframe (drill down / up to bottom): monthly, weekly, daily, then M30.

- Rule #8: If there is a doubt in labeling or the wave is not perfectly made, then don't push yourself to enter the market.

Case study EUR/usd:

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Labeling Charts Monthly EUR/USD, it is clear that EUR/usd is in the downtrend making L.3.2.

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Labeling Charts Weekly EUR/USD
Pay attention that ML.2 & ML.3.1 are now become Point W:X (the start of labeling for this timeframe.) From this weekly chart we understand that EUR/usd is in the down trend from point W:X to W:A after that it will go up making point W:B for a retracement.

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It is clear that point ML.3.1 & W:X becomes Point X on daily chart. All labels on this daily chart are candidates for point X on M30 chart.

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Pay attention that DC2 becomes Point X on M30 chart, and continues the labeling. This power wave technique will be very powerful for those who use Dow Theory. 

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This is the newest position after NFP last friday. Pay attention that D:J on daily chart becomes point X on M30 chart, then forming A then B. Let's see if eur/usd succeeded in going to 1.4550 (2 times of X to A), or if after 4 days, the long position will be closed manually. Or the stop loss at point X is hit.