Upload
vic-patel
View
265
Download
11
Embed Size (px)
Citation preview
Understanding the Basics of
Trading with Elliott Wavecc: rsmithing - https://www.flickr.com/photos/50048137@N00
In the early 20th century, an accountant named
Ralph Nelson Elliott discovered a very important
pattern in the markets.
He discovered that when the price is trending it creates five
legs. Three of these are impulse waves that move in the
direction of the trend and the other two are corrective moves
which move counter to the trending movecc: ClickFlashPhotos / Nicki Varkevisser - https://www.flickr.com/photos/27015396@N08
He further found that when this trend phase gets exhausted,
the price action shifts to a corrective phase, which could be
tracked in three moves counter to the trending move.
cc: DavidSpinks - https://www.flickr.com/photos/28669457@N04
ELLIOTT WAVE COUNT
• He concluded that there would be 5 moves that make up the trending phase, and 3 moves that make up the corrective phase.
• This is known as the 5-3 Elliott Wave count.
The 5-3 Elliot Wave Count
Elliott Wave Rules and
Guidelinescc: Ed.ward - https://www.flickr.com/photos/44423341@N00
ELLIOTT WAVE RULES
• Wave 2 cannot retrace more than 100% of Wave 1.
• Wave 3 can never be the shortest of the three impulse waves
• Wave 4 can never overlap Wave 1.
ELLIOTT WAVE GUIDELINES
• Guideline of Alternation states that Wave 2 and Wave 4 will alternate.
• Guideline of Corrective Wave Depth – The corrective A, B, C sequence with typically retrace within the territory of the previous Wave 4.
• The Guideline for Channeling – The use of Elliott Wave parallel trend lines helps to project end points of impulse waves
Fibonacci Ratios in Elliott
Wave Patternscc: Paw Prints Pix - https://www.flickr.com/photos/58563729@N06
COMMON RELATIONSHIPS
Wave 2 – 50.0%, or 61.8% of Wave 1.
Wave 3 – 161.8%, 261.8% of Wave 1
Wave 4 – 38.2%, 50.0%. 61.8 of Wave 3
Wave 5 – 100% of Wave 1 or 161.8% of Wave 4
COMMON RELATIONSHIPS
Wave A – 161.8%, 100%, 61.8%, or 50.0% of Wave 5.
Wave B – 50.0%, 61.8 of Wave A.
Wave C – 100% or 161.8% of Wave A, or 161% of Wave B
The Best Elliott Waves to
Tradecc: freshwater2006 - https://www.flickr.com/photos/77422674@N00
TRADE SETUPS• The most powerful wave within the
Elliott Wave Sequence is Wave 3.
• Wave 5 also provides a good trading opportunity.
• Within the corrective phase, Wave C provides the highest probability trade setup.
Check Out the “IN DEPTH”
Blog Post on this Lesson