The weekly 1-2-3 map as a permission layer

The weekly map as a permission layer

TradersWeek editorial aim: teach swing traders to treat the weekly 1-2-3 map as a weekly-permission-layer. A daily close through the eight-day average is only a live hypothesis if the larger count still allows a wave-1-or-3.

On the weekly map, a later wave 3.3 above the wave-3.2 high stays a live hypothesis only while the current corrective wave 2 holds above the start of wave 3.2.

The daily wave-1-or-3 filter

The daily entry checklist requires the expected zigzag to be counted as a wave 1 or a wave 3 before a long or short is allowed. A wave-1-or-3 is the only zigzag treated as a valid continuation trade. A wave-2 reaction is context or a limited fade, not a new impulse entry.

The irsts-checklist is the eight-condition daily filter. It combines an eight-day exponential-average break, a turning-point candle, volatility-band proximity, and a wave-1 or wave-3 count.

The August and October daily checks

In the 26 August 2010 daily example, a close above the eight-day exponential average coincided with a morning-star low later confirmed by a bullish engulfing candle, and the last turn sat near the volatility-band low.

A later close below the eight-day exponential average on 5 October 2010 was checked against a 161.8 percent Fibonacci projection of the prior decline from wave 3 to wave 3.2, which landed at 15.53 and nearly matched the weekly 23.6 percent retracement.

A wave-2 reaction short was framed first by a common 50 percent retracement toward 14 and later by a 61.8 percent Fibonacci retracement near 13.55, with nearby moving-average support treated as a reason to take the reaction rather than press a new impulse short.

Waiting after the wave-3.1 high

After a presumed wave-3.1 high, the weekly 38.2 percent retracement near 22.06 had already been broken on the rally, so the case preferred waiting for a turn near 22 and targeting the next 50 percent weekly retracement at 27.31 instead of shorting the correction.

Once price turned up from the 22 area, a Fibonacci projection from the last wave-2 low through the prior wave-3.1 high produced a 161.8 percent extension at 28.16, used to raise the primary target after a gap toward the weekly 50 percent retracement.

That measured extension is the fibonacci-projection in this workflow: a completed swing is projected to estimate where a later wave may stall when it agrees with a higher-timeframe retracement.

Pitchfork rails and the later weekly veto

When price reached the long-term 50 percent upward retracement while also approaching the upper rail of an upward pitchfork and riding the upper volatility channel, the weekly map expected a reaction toward the 200-week average and the lower pitchfork rail, leaving room for a valid wave-2 correction.

A median-line-pitchfork is a three-point Andrews-style channel. Its upper and lower rails mark where an impulse is extended and where a later wave-2 reaction may be aimed.

A later weekly decline that undercut the previous wave-2 low was counted as a new downward wave 1, ending the prior upward-impulse hypothesis.

Fibonacci projections and retracements plus pitchfork channels are applied after the eight-condition entry as targeting and invalidation tools, not as substitutes for the wave-1-or-3 and candle-turn checklist.