The Ellipse

[mattgundersen]

I was talking with Alexis and he's been recommending the Ellipse tool to me. What I'm wondering for any of the Ellipse experts (yo Alexis!).

Here's INTC on a 60 minute chart. The Ellipse is setup to show Short, Normal, and Long time frames. There are two sets of Ellipses one this chart.

The first ellipse, which shows circles around the "4" was drawn from the 2-3 wave labels. The second ellipse was drawn from the 3-4 wave labels.

My question about the ellipse is how do you decide what points to use when drawing the ellipse?

In this particular case, the ellipse based off the W2->W3 labels looks good. Price bounce right off of it. What about the ellipse based off the W3->W4 labels? Since W4 just ended and it's going ito the W5, shouldn't that ellipse be higher than the W3?

http://share.esignal.com/ContentRoot/PrivateDemo/intc.png

[sbrum]

Ellipse

Matt - It really depends on what you want to do. The ellipse is used to look at retracements and the Mob is for extensions. If you are trading with the wave counts and want to see where the w5 will extend, then use the mob off of wave 3. If you are just looking for a pull back between w4 and w5 then you can use the ellipse between 3 and 4. This assumes that you think that the w4 is going lower and not making new highs.

[ACM]

Matt, here I come.

Ok first with regards to the Ellipse I tend to use one only ie the Normal.
Second, more important than where the Ellipse is IMHO is the shadow. My experience tells me that so long as the shadow follows prices the Ellipse has more chances of hitting prices in the right point.
Also I always use Ellipse in conjunction with Elliott hence
yes the wave 3 Ellipse (ie the one from blue circled 2 to blue circled 3) has signalled the possible end of wave 4 which remains the preferred count as of now.
Side note: I tend to avoid using the Original count because with futures it allows an overlap of wave 1 which for me is a no-no (but that is a personal adherence to the rules)
Continuing ... The Ellipse that measures the presumed wave 4 is right where it should be as it highlights the point IMHO where this market will decide if this move up is actually only a B (of a larger ABC) or if it is indeed a wave 5.
To measure where wave 5 is projected I would use the MOB and FIB extensions.

To me assuming you bought end of wave 4 (type 1 trade) you now decide whether you want to stay in the trade protecting with channel or MA or collect some profit and wait for possible pullback to buy again on another Ellipse.
For the swing traders like me this is a possible shorting point in as much as it has low risk and the reward is that it could go down to do a C wave that would take this market quite lower. (this would be my alternate count to the preferred above).
If the trade fails I stop and reverse and put myself long again.

More follows in other message

Alex

[ACM]

continues from prior message

I scaled down to 15 minutes
So at this point we have two possible trades working.
Type1 buy at the wave4. If we decide to stay in because we believe that it is a wave 5 upwards we would need to protect the trade.
One option is to use the 6/4 channel or another channel of choice (I personally use 3/1).
An alternative is to immediately plot an Ellipse from beginning of wave 5 to current high and then give the market room to breathe. So long as prices don't close below the currently open Ellipse we stay in the trade.
If on the other hand we were daring swing traders and took the short the ellipse from below might signal where to take profits or decide to continue the short.
The reason I scaled down to 15 minutes is because the same ellipse on a 60 minute would be measured over three-four bars and IMHO less than eight is a crapshoot.
Notice that I continue to use only the Normal btw.
If prices now close above the ellipse then I take my losses and reverse at the first opportunity. Either way the ellipse has given me a low risk entry for a swing trade probe.

Where to draw ellipses from?
In general I use Primary or Major pivots or defined waves. If seeking re-entries I may scale down to Intermediate pivots but I usually prefer to go to a lower interval (within limits).

Alex

[ACM]

Forgot to add in prior messages that I have found that the best entries on ellipse are only when the ellipse is locked in position and meets prices within a bar either side.
By locked in position I mean that shadow and ellipse have met.

With regards to the INTC possible short that means that the trade would have been entered at around 17.33
On a close below the 3/1 or 6/4 or whatever other protective channel or tool one uses the stop for the short would be lowered at the high made at the ellipse (17.37 I believe).

Alex

[ACM]

Was I hallucinating or did I see Tom Joseph's photo somewhere in this thread?
Alex

[Ron Wheeler]

When using Elliott Counts the correct usage for the Ellipse would be from 2-3, the Ellipse is a retracement tool and the Wave 4 is the retracement. Once the market starts to rally into the Wave 5 use the Mob for your targets.

The Ellipse is a huge part of my trading, whether it is a 1 minute chart or a Daily. I tend to use the oscillator to guide me where to draw the ellipse. When the oscillator is strong, above/below the breakout bands, I measure that trend and take the trade when the ellipse holds and the oscillator returns to zero.

[Ron Wheeler]

[QUOTE]Originally posted by Alexis C. Montenegro
Was I hallucinating or did I see Tom Joseph's photo somewhere in this thread?
Alex [/QUOTE ]Yep... We were testing the AVATAR function

[gspiker]

Hi have a q related to this. Since my goal is to completely automate my entry and exit's I am only looking at using tools that will automatically generate results - with no user intervention. It was fairly trivial for me to write an EFS that did basically what the pivot study did (this was before Matt added EFS access to the pivot) and then wrote my own (slightly modified) GANN price and time study (also fairly trivial) that would auto plot.

But with the MOB and ellipse, there is no method I know of to access these via EFS (since they require human interaction to start), and I don't know how these are calculated.

So my questions are:

1) Are these propietary indicators, or is it possible to share the methods used to calculate them?

2) Is there a way to allow EFS access to them that I'm missing?

[mattgundersen]

Garth, as to accessing the Ellipse, MOB, and P&T study, my $0.02 is they are properitary code. However, I'll see what can be done to add access to them via EFS.

Alexis, regarding multiple time frames, I see you using the 15 minute. Do you tend to use larger time frames in conjunction with the smaller time frames to get a feel for the general market direction?

m.

[ACM]

While Steve ponders his reply here is my take.

You don't necessarily need it, but belt and suspenders is better than just either by itself especially when the two tools converge.
Just my two cents.
Alex

What is happening to this forum? Messages and photos of Tom Joseph appear and disappear. I just replied to a message from Matt and now that has vanished too.

[ACM]

Re: Reply to post 'The Ellipse'

Alexis, regarding multiple time frames, I see you using the 15
minute. Do you tend to use larger time frames in conjunction with the
smaller time frames to get a feel for the general market direction?

Yes indeed. In fact the other thing I was just about to suggest with regards
to this INTC trade was to go and see where the big[ger] guns are pointing ie
the daily.
If one were to look at that the picture provides a very different
perspective IMHO.
As to Elliott counts I rarely use any below 15 minutes whereas with ellipse
I will use it even down to a 1 min to seek low risk entries in pullbacks or as a
protective tool (I tend to prefer it to MAs or envelopes etc)
As to the intervals I use I always try to use intervals that fit evenly in a
trading session (I only trade ES so these would be 1-5-15-45)
Alex

[AB]

INTC Hourly Ellipse

Nice call, with the Ellipse, Alex. If you would have sold at 17.33 with a stop above 17.38, it would have produced over a 4 to 1 in reward to risk. The attachment shows the original set-up with the new Replay tool. The Reward/Risk was calculated by using the Fib. extension tool.

[mattgundersen]

Interesting. Per an earlier post my impression was the Ellipse was to be used by clicking on the W2 & W3 as a predictor for the W4. By this most recent post it appears you can use it in other places simply using the W3->W4 or other waves as the "click" points.

m.

[Ron Wheeler]

Originally posted by mattgundersen
Interesting. Per an earlier post my impression was the Ellipse was to be used by clicking on the W2 & W3 as a predictor for the W4. By this most recent post it appears you can use it in other places simply using the W3->W4 or other waves as the "click" points.

m.

The "textbook" use for the ellipse is from W2 to W3 to predict W4, however the ellipse can be used to measure any swing. To use the ellipse to it's full potential and IMO the most accurate way, you need to make sure you are measuring an extension wave to look for a retracement as opposed to measuring a retracement wave looking for another retracement.

This is why I combine the OSC with the ellipse to confirm we are in a strong trend and not a retracement.