Domination Wave Theory is not Elliot Wave Theory. Waves are counted on the smoothed or double-smoothed oscillating indicator rather than on the market. From peak to valley on the indicator’s waves constitute one leg.

The Beginning of Domination Waves

These waves and their respective legs are of definite value in predicting near-term future direction of a market.

Wave is a move up and down in an undulating motion. Wave is derived from the Middle English word waven, which means, to fluctuate.

The MACD, like any other smoothed, or double-smoothed, oscillating indicator, travels in waves, like the market.

In order to have another part of a wave pattern, another leg, the oscillating indicator must actually change direction from up to down, or from down to up on the close of a bar. Even if the change in direction is minute, the change in direction counts.

How to Determine the Start of a New Leg on a Wave

There are 4 ways to determine the start of a new leg on an oscillating indicator wave on a chart:

1. Weakness Divergence. (You have seen divergences already on this site.)

4. If a leg 2 moves beyond the beginning of a “leg 1”, it is automatically now the beginning of a new leg 1.

Necessary Characteristics of Domination Wave Patterns

These necessary characteristics are on the smoothed indicator, not on the market.

When the beginning of a new leg 1 on a chart is on the top side (market to move lower in price), then the end of leg 1/start of leg 2 must be lower than start of leg 1. The end of leg 2 / start of leg 3 must be higher than the end of leg 2 / start of leg 3 and lower than the beginning of the leg 1 on that chart. The end of leg 3 must be lower than the end of leg 1.

If the beginning of a new leg 1 on a chart is on the bottom side (market to move higher in price), then the end of leg 1 / start of leg 2 must be higher than the start of the leg. The end of leg 2 must be lower than the start of leg 2 and higher than the beginning of leg 1. The end of leg 3 must be higher than the end of leg 1.

Leg 1 is a move in a direction. (Thrust) (Strength in that direction)

Leg 2 is a re-alignment period (retracement of the move of Leg 1). (Weakness in that direction.)

Leg 3 is another move in the direction of Leg 1. More certain Thrust. (Confident Strength in that direction)

“Wave Mapping“, which will be covered in much more detail as this series of Domination Wave lessons progresses, is ONLY applying the above over and over on different time frames.

The smoothed oscillating indicator will either move straight to a signal pattern (fractal), or give three or more legs. When there is a new end of one leg / start of the next leg on a chart, two charts smaller will give you four parts 99% of the time. The one exception to this is with large, quick, vicious thrusts that produce a series of what are called “slide charts”, which you will learn more about in line-ups and time-synchs in the Inner Sanctum.

There is still a LOT more coming on Domination Wave Theory. I just want to lay down the groundwork before really digging in and explaining each concept on Domination Wave Theory given above.

If you have any questions or comments, please leave them. I will answer as soon as I can.

Have a phenomenal trading day, and prepare for some mind-blowing revelations on Domination Waves.

A Wave is a move up and down in an undulating motion. Wave is derived from the Middle English word waven, which means, to fluctuate.

The MACD, like other oscillating indicators travels in waves, like the market. In order to have another part of a wave pattern, the MACD must actually change direction from up to down, or from down to up on the close of a bar. Even if the change in direction is minute, the change in direction counts.

There are 4 ways to determine the end of a motion in a direction to end the last leg and to begin the Leg 1 on a MACD wave on a chart:

1. MACD weakness divergence
2. Last actual curve on the next larger chart, use that market peak and the immediate curve on the current chart as a beginning of the Leg 1 on “this” chart.
3. Leg 3 (or 5) automatically becomes the start of a Leg 1 until the market proves it otherwise.
4. If a Leg 2 moves beyond a start of a Leg 1, it is automatically now a new start of a new Leg 1.

If Leg 1 start on the MACD is on the top side, then Leg 2 start must be lower than the Leg 1 start. The Leg 3 start must be higher than the start of Leg 2 and lower than the start of Leg 1. The end of Leg 3 on the MACD wave must be lower than the end of Leg 2.

If the start of Leg 1 is on the bottom side, then the start of Leg 2 must be higher than Leg 1’s start on the MACD. The start of Leg 3 must be lower than the start of Leg 2 and higher than the start of Leg 1. The end of Leg 3 must be higher than the end of Leg 1.

1. Leg 1 is a move in a direction. (Thrust) (Strength in that direction)
2. Leg 2 is a re-alignment period (retracement of the move from Leg 1). (Weakness in that direction.)
3. Leg 3 is another move in the direction of Leg 1. More certain Thrust. (Strength in that direction)

Market Mapping is ONLY applying the above over and over on different time frames.

The MACD will either move straight to a signal, or give three more legs. When there is a new leg on a chart, one or two charts smaller will give you three legs. The one exception to this is with large, quick, vicious thrusts that produce a series of what are called “slide charts”, which you will learn more about in line-ups and “time synchs”.

See the coming video on the MACD wave, which covers everything in this section.

And as always, feel free to ask questions, leave comments or add value to a discussion here.

Have a truly phenomenal weekend!

Things are crazy here, so I won’t be making a forex training video tonight. Instead, here’s some great, useful information for if you use the ADX (Average Directional Index).

ADX Basics: Definitions of move and trend, and the 4 Main ADX Principles

In the ADX we can see that we have varying degrees of strength and weakness. Those varying degrees are given below, and are important later on because when certain conditions are not met, we KNOW what has to happen. Every single time, but not always to a new extreme.

Definition of move on the ADX:

When the market makes a move and the ADX changes direction. (i.e. from moving up to now moving down, or from moving down to now moving up. A flat ADX is not a change in direction.)

1. When the market makes a move and the ADX increases, that move is a strong move on that chart at that time.

2. When the market makes a move and the ADX decreases, that move is a weak move on that chart at that time.

Definition of trend on the ADX:

After a strong move (as above, or trend of any kind) the market moves in the other direction and the ADX decreases, THEN the market moves farther in the direction of the previously strong move (or trend of any kind), we now have a trend on that chart at that time.

3. In a trend, when the ADX moves higher than it was at its previous high peak, we have a strong trend on that chart at that time.

4. In a trend, when the ADX is not now higher than it was at its previous high peak, we have a weak trend on that chart at that time.

The idea behind the definition of trend…

Is that we have strength in any form (a weak trend is still stronger than a weak move), then the ADX decreases, and after that decrease, the market then moves farther than it did before in the previous direction of strength. [Please note in the above that we have moves and trends. Also note that we have strong move, weak move, strong trend, weak trend.]

Definition: End of a Trend

A trend is over on that chart when the ADX tracks strength in the direction opposite the trend. Once the ADX says a trend is over on that chart, more strength on that chart in the same direction is now a move until the conditions are again met for it to be a trend on that chart at that time.

If the ADX does not fall between moves in the market, and still tracks strength in a direction then keeps moving in that direction, it is still a move.

The ADX must fall, even just a little bit, before again moving up as the market moves farther that it previously did in order to have a trend. Once the market moves farther, we have either a strong trend or a weak trend.

In sequence from weakest to strongest: weak move, strong move, weak trend, strong trend. In defining trend, anything other than a weak or very weak move counts as previous strength.

Only compare ADX peaks that are tracking the same direction of movement or trend strength.

ADX Principles Shown on a Chart

Let us take a look at the ADX (black line indicator below) regarding strong and weak moves:

It is possible to have a move be weak, then turn strong. It is possible to have a move be strong then turn weak. It is possible to have a weak trend turn to a strong trend. It is possible to have a strong trend turn to a weak trend, or even a weak move. See the coming video(s) on the ADX for more explanation.

If you have any questions or comments, please leave them. I’ll get back to answer them asap. Since part of my goal here is for you to understand what I’m teaching here, if there is anything you don’t “get”, just ask.

Have a truly phenomenal trading day (and weekend!) P)