Elliott wave analysis
Elliott Wave analysis what is it?
Predict Market Direction.
Identify turning points.
Provide Guidance for Entering and Exiting Positions.
In the pictures below the description of the complete market cycle.
Elliott Wave the complete market cycle
MOTIVE WAVES
Key Characteristics
. Five-wave structures, numbered 1-5
. In the direction of the main trend of one larger degree
. Wave 2 cannot retrace more than 100% of wave 1
. Wave 3 can never be the shortest and is often the
longest
EXTENSIONS
Key Characteristics
. Elongated impulse wave
. Appears in either wave 1, 3 or 5
. Often seen in wave 3 for the stock market
. Often seen in wave 5 in commodities
MOTIVE WAVES
Five-Wave Structures
. Impulse
1. Extensions
2. Truncations
. Diagonal Triangles
IMPULSE WAVES
Key Characteristics
. Wave 4 never enters the price territory of wave 1.
. Actionary waves 1, 3 and 5 are motive waves.
. Wave 3 is always an impulse wave.
TRUNCATIONS
Key Characteristics
. Wave 5 does not exceed the end of wave 3
. Contains necessary five subwaves
. Often occurs after a strong third wave
DIAGONAL TRIANGLES
Key Characteristics
. Wave 4 almost always moves into the price
territory of wave 1
. Waves 1, 3 and 5 are composed of three
subwaves, not five
. Found at termination points of larger pattern,
indicating exhaustion of larger pattern
. Normally has wedge shape within two
converging lines
Elliott Analisys is:
The Wave Principle = Graphic of Mass Psychology
Motive Waves = 5 Wave Structures, Main Trend of One Larger Degree
Types of Motive Waves = Impulse, Diagonal Triangle
Impulse:Waves 1, 3, 5 = 5 Impulse Subwaves
(Extensions, Truncations)
Wave 4 ≠ Price Territory of Wave 1
Diagonal Triangle: Waves 1, 3, 5 = 3 Subwaves
Wave 4 = Price Territory of Wave 1
Signal = Imminent Major Trend Reversal