Question on Divergence, AO crossover and 5th Wave

[Pall_Singh]

Hi there,

I'd like to clarify a point with regard to divergence and 5th Wave and I've attached a screenshot of the 1min chart for illustration.

According to Bill Williams, 5th Wave can only be considered when divergence occurs after the crossover of AO.

But in many of the examples, trades are taken on the 5th Wave (divergence) without crossover of AO.


----------Question 1 refers to attached chart
1)So if you enter a trade to go short on the 1 min chart that causes divergence but without the crossover of AO, can you still look to go short after AO has crossed in anticipation of the actual 5th Wave and another divergence?


-------------Questions 2, 3 & 4 do not really refer to attached chart
2)Also if no divergence had occured at all after the peak of AO and 3rd Wave in a downward movement on the 1min chart, and then price starts going up and crosses the purple line, is it safe to enter a long on setup 1 above the purple line or is better not to take the risk and skip the trade since no divergence had occured and price might suddenly swing around to complete the 5th wave and divergence?

3)If there is a peak of AO and downwards movement of Wave 3 formed on the 5mins chart but no divergence has yet taken place, won't it be safer to enter a long on the 1min chart if setup 1 occurs above the purple line on the 5min chart rather than the purple line of the 1min chart?

4)Finally, if a proper divergence (5th Wave) occurs after the AO crossover and the 5th Wave also hits the target zone (between 61.8% and 100%). In this case won't it be safe to enter a valid setup 1 going to the opposite direction even if price has not yet crossed the purple line?

I hope you understand my questions and thanks for the replies.

Best of Regards,
Pall

[John Wimberley]

Hi there,

I'd like to clarify a point with regard to divergence and 5th Wave and I've attached a screenshot of the 1min chart for illustration.

According to Bill Williams, 5th Wave can only be considered when divergence occurs after the crossover of AO.

But in many of the examples, trades are taken on the 5th Wave (divergence) without crossover of AO.


----------Question 1 refers to attached chart
1)So if you enter a trade to go short on the 1 min chart that causes divergence but without the crossover of AO, can you still look to go short after AO has crossed in anticipation of the actual 5th Wave and another divergence? 1st rule, A setup, is a setup, is a setup. Waves should be for reference only. I can't tell you how many setups I didn't take because I felt the wave count was telling me something different. Many times what we thought was a completed 3rd or even 5th wave becomes an extended 3rd wave, so as I say above, do not get caught up in wave counts.


-------------Questions 2, 3 & 4 do not really refer to attached chart
2)Also if no divergence had occured at all after the peak of AO and 3rd Wave in a downward movement on the 1min chart, and then price starts going up and crosses the purple line, is it safe to enter a long on setup 1 above the purple line or is better not to take the risk and skip the trade since no divergence had occured and price might suddenly swing around to complete the 5th wave and divergence?If AO has peaked, then by definition, AO must be in divergence. The 2nd part of your answer is describing a 4th wave.. either grounded or ungrounded depending on whether not not it has crossed the Zero Line. 4th wave is where we tend to undo all our hard work, giving back pips to the market. Try not to trade 4th wave. They are corrective waves and as such tend to be low energy, and prone to indecisive moves.

3)If there is a peak of AO and downwards movement of Wave 3 formed on the 5mins chart but no divergence has yet taken place, won't it be safer to enter a long on the 1min chart if setup 1 occurs above the purple line on the 5min chart rather than the purple line of the 1min chart? We never trade towards the purple. If there is a downward trend on the 5 min, then 99 times out of 100 the purple on the M1 will be above the price action. The only time purple might be the other side, is in a fairly powerful C principle movement

4)Finally, if a proper divergence (5th Wave) occurs after the AO crossover and the 5th Wave also hits the target zone (between 61.8% and 100%). In this case won't it be safe to enter a valid setup 1 going to the opposite direction even if price has not yet crossed the purple line? The main thing to remember that the purple line shows trend on a 5 times higher time frame. Does the purple still show trend once a wave count has been completed? That's a good question and is the basis for an advanced form of trading using AIMS and the purple line.

I hope you understand my questions and thanks for the replies.

Best of Regards,
Pall

Best Advice I can give to you and all people who are new to AIMS is this. Do not get overally concerned about Wave Count. Learn to recognise the setup 1st, then, if you wish, incorporate wave count later. I hope this answers your questions.

[immy]

John

thank you for replying to this post, while i was away i tried twice and lost connect twice, so I gave up. I was just about to prepare an answer and saw your post. Thank you. I totally agree with what you said.

cheers

[John Wimberley]

Thanks Immy.