GOL Parent Wave 3 Setting Up

We have been following GOL since late March when Zortrades of StockTwits first flagged it in his post.

All SST posts on GOL can be found here as well.

I have been drawn to this stock because of its potential relative to an elliott wave formation. I’ve had to remind myself that many times as you don’t want to let the theory you are using in trading dictate a strategy that does not exist.

When the plan to execute is there utilize your plan with action. When it is not, move on.

So far GOL has made many memorable moves (sarcasm) but has not yet strayed from the initial elliott wave count projections.

Initial Elliott Wave projections below.
GOL_032411calculations.png

A look at the price motion since the initial call to its wave 1 top and some of its surprises.
gol_042711_elliott_wave_parent1_complete.png

Right now is make or brake time. Without a hold of the price zero low the count will be lost.

We’ve been in and out of the stock profitably in the past and have currently been buying on the pull back with average price 13.30.

Past analysis showed that we were in a corrective wave 2 from the 14.35 high. The projected high was 14.29.

A wave 2 can correct up to 100% so the prior posts analysis that divergence was not yet sufficient was accurate to expecting lower lows.

The prior price projections for wave 2 below.
gol_050611_elliott_wave_trianglewaveB.png

The chart markup for lower low expectations past these projections relative to macd divergence below.
gol_051111_elliott_wave_trianglewaveB.png

A current chart below at the 30 min timeframe shows that divergence to the 5/11/11 MACD low that was the initial break of the C wave has diverged a significant amount to satisfy that a low in price may be in.

gol_051811_elliott_wave_wave2_bottom.png

Currently GOL has traded down to a price of 12.80. This is 3cents off the projected low of internal wave 2 of 1 and also close to the actual internal wave 2 of 1 low of 12.76 on 3/14/11.

To see that the internal wave 2 low is maintained is encouraging. Even though the parent wave 2 can correct up to 100% as previously mentioned, the theory of price projections/price motion is based off of wave 1’s.

Essentially wave 1 magnitudes are defined by the success of wave 2 to hold the price zero lows. Without successful wave 2, there is no bullish 5 wave sequence/no wave 1 magnitude to use in a count.

If parent wave 2 of GOL is complete at 12.80 the following internal wave 1 of 3 has been established in the current price action and its projections are also encouraging as they aim to reach the internal wave 1 of the parent price projections around the same 14$ level.

GOL is now building a 5 wave sequence of internal waves to the parent wave 1 of parent wave 3.

The parent wave 1 of 3 is shown in this chart that outlined the correction at 14.16.

The internal waves of wave 1 of parent 3 (to this point) are shown in the chart below using the 12.80 low and the latest high as wave 1.

gol_051911_elliott_wave_price_calculations.png

If this price target is met and wave 2 is not violated on either the parent or internal waves structure then new calculations can continue to be drawn in anticipation of higher prices.

Tagged on:
  • This pattern did not hold true as price zero low was taken out and was noted in the StockTwits feed May 20, 2011: @SSTtrader $GOL elliott wave count not valid, broke wave 1 low.