The Bullish 5-0 starts at the 0 point, representing an extended down leg to begin the pattern at X. The initial point X acts as the low of this prior substantial decline.
After a quick reactive bounce to the A point, the structure abruptly continues the decline, only to find support slightly past the prior low at X. This is the failed wave 3 or wave 5 – in Elliot Wave terms – that establishes the rest of the structure.
However, the important limits from the Harmonic Trading perspective requires that this X, A extension be at least a 1.13 but not greater than a 1.618. After that impulsive failed wave is established, the BC leg rallies to at least a 1.618 extension of the AB length but it does not exceed 2.24.
Again, this tight range of 1.618-2.24 is a defining element of the structure. If the 1.618 limit is not reached, the structure is not a valid 5-0.
It will take some time to begin to identify this structure but the obvious characteristic is the failed down wave followed by a precise 1.618-2.24 extension. At that point, it is important to calculate the 50% retracement level with the Reciprocal AB=CD and study the price action in the PRZ.
Dow Jones Industrial Average ($INDU): 5-Minute
This intra-day chart of the Dow Jones Industrial Average exemplifies an ideal 5-0 structure. After an extended decline from 9855, the index bounced (A) and then declined a bit further taking out the prior low (X) in an intra-day shake out to the 1.13 extension, before rallying in the mid-afternoon to the C point.
Millennium Pharmaceutical (MLMN): Weekly
This chart of Millennium Pharmaceutical demonstrates the effectiveness of the pattern in longer-term situations. After declining steadily in through 2002, the stock completed a failed down wave that nominally took out the prior low in early 2003 before rallying sharply to the 2.0 projection of the AB leg.
Standard and Poor’s 500 June 2004 Mini-Contract(ES_M4): 60-Minute
This chart of the ES was illustrated in advance. The structure was quite distinct and the 50% retracement was calculated at 1113. In addition, the Reciprocal Bullish AB=CD was projected to complete in the same exact area.
Although it will take time to identify these situations, 5-0 opportunities like these occur frequently in the financial markets.
After a quick reactive bounce to the A point, the structure abruptly continues the decline, only to find support slightly past the prior low at X. This is the failed wave 3 or wave 5 – in Elliot Wave terms – that establishes the rest of the structure.
However, the important limits from the Harmonic Trading perspective requires that this X, A extension be at least a 1.13 but not greater than a 1.618. After that impulsive failed wave is established, the BC leg rallies to at least a 1.618 extension of the AB length but it does not exceed 2.24.
Again, this tight range of 1.618-2.24 is a defining element of the structure. If the 1.618 limit is not reached, the structure is not a valid 5-0.
- Bullish 5-0 Pattern:
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It will take some time to begin to identify this structure but the obvious characteristic is the failed down wave followed by a precise 1.618-2.24 extension. At that point, it is important to calculate the 50% retracement level with the Reciprocal AB=CD and study the price action in the PRZ.
Dow Jones Industrial Average ($INDU): 5-Minute
This intra-day chart of the Dow Jones Industrial Average exemplifies an ideal 5-0 structure. After an extended decline from 9855, the index bounced (A) and then declined a bit further taking out the prior low (X) in an intra-day shake out to the 1.13 extension, before rallying in the mid-afternoon to the C point.
- Dow Jones Industrial Average ($INDU): 5-Minute:
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Millennium Pharmaceutical (MLMN): Weekly
This chart of Millennium Pharmaceutical demonstrates the effectiveness of the pattern in longer-term situations. After declining steadily in through 2002, the stock completed a failed down wave that nominally took out the prior low in early 2003 before rallying sharply to the 2.0 projection of the AB leg.
- Millennium Pharmaceutical (MLMN): Weekly:
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Standard and Poor’s 500 June 2004 Mini-Contract(ES_M4): 60-Minute
This chart of the ES was illustrated in advance. The structure was quite distinct and the 50% retracement was calculated at 1113. In addition, the Reciprocal Bullish AB=CD was projected to complete in the same exact area.
- Standard and Poor’s 500 June 2004 Mini-Contract(ES_M4): 60-Minute:
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- Potential Reversal zone (PRZ) :
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- ES reversed :
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Although it will take time to identify these situations, 5-0 opportunities like these occur frequently in the financial markets.