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Elliott Wave - Basic PDF

The Elliott Wave Theory is a technical analysis method used to forecast stock market movements. [1] It divides market behavior into recurring patterns of bullish and bearish waves. [2] There are only three hard rules for interpreting waves: Wave 2 cannot retrace more than 100% of Wave 1, Wave 3 must be the longest impulse wave, and Wave 4 cannot overlap Wave 1. [3] Guidelines and Fibonacci ratios provide additional analysis of wave relationships. Mastering the theory takes experience but can provide an important tool for traders when applied with dedicated software.

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1K views14 pages

Elliott Wave - Basic PDF

The Elliott Wave Theory is a technical analysis method used to forecast stock market movements. [1] It divides market behavior into recurring patterns of bullish and bearish waves. [2] There are only three hard rules for interpreting waves: Wave 2 cannot retrace more than 100% of Wave 1, Wave 3 must be the longest impulse wave, and Wave 4 cannot overlap Wave 1. [3] Guidelines and Fibonacci ratios provide additional analysis of wave relationships. Mastering the theory takes experience but can provide an important tool for traders when applied with dedicated software.

Uploaded by

BasseyMilesAttih
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

ELLIOTT WAVE

THEORY
Introduction
R.N. Elliott developed Elliott Wave Theory in the 1920s.

Elliott Wave Theory is a commonly used form of technical analysis


that is applied to stock market charts for the purposes of
forecasting the future direction of prices.

The secret of the Elliott Wave Theory is to learn how to correctly


detect these wave patterns that tend to occur over and over
again in the markets.

These wave patterns can be divided into basically two kinds, the
trending wave and the non-trending wave. Some people call
them impulse waves
and corrective waves.
Basic Sequence

There are two types of waves: impulse and corrective.


Basic Sequence
Basic Sequence
Basic Sequence
Basic Sequence
Three Rules

Believe it or not, there are only three rules when it comes to interpreting
Elliott Wave. There are many guidelines, but only three HARD rules.
These are unbreakable. Guidelines, on the other hand, are bendable and
subject to interpretation. Furthermore, these rules only apply to a 5-wave
impulse sequence. Correction, which are much more complicated, are
given more leeway when it comes to interpretation.

Rule 1: Wave 2 cannot retrace more than 100% of Wave 1.


Rule 2: Wave 3 can never be the shortest of the three impulse waves.
Rule 3: Wave 4 can never overlap Wave 1.
Three Rules
Three Guidelines

There are numerous guidelines, but this article will focus on three key
guidelines. In contrast to rules, guidelines should hold true most of the time,
not necessarily all of the time.

Guideline 1: When Wave 3 is the longest impulse wave, Wave 5 will


approximately equal Wave 1.

Guideline 2: The forms for Wave 2 and Wave 4 will alternate. If Wave 2 is a
sharp correction, Wave 4 will be a flat correction. If Wave 2 is flat, Wave 4
will be sharp.

Guideline 3: After a 5-wave impulse advance, corrections (abc) usually


end in the area of prior Wave 4 low
Three Guidelines
Fibonacci Ratios

There are many ways to apply Fibonacci studies to technical analysis and
we also look for Fibonacci ratio relationships between the related waves in
a cycle. Here are some common ratios to look for....
Wave 3 to wave 1 1.618, 2.618, 4.236...
Wave 5 to wave 1 0.618, 1, 1.27, 1.382,
Wave 2 0.616, 0.786
Wave 4 0.382, 0.5
B waves 0.5, 0.618, 1.00
CONCLUSION

The Elliott wave theory and application to the markets is


one of the most Important tools that a trader has at his
fingertips. It is overlooked and not Used due to its
subjectivity. The rules of the theory must be mastered and
Experience is needed before it can be successfully used
for trading

Purposes. Until now there was not software program


capable of allowing the trader to use the theory in his
trading. The ELWAVE program has filled that important
gap. It has everything in it to successfully a trading
program for The markets. Put the Elliott wave theory to use
in the markets with the help Of the ELWAVE program and
you should learn to love to analyze and
Successfully the markets.
THANK U

Vince K D

ELLIOTT WAVE THEORY
R.N. Elliott developed Elliott Wave Theory in the 1920’s. Elliott Wave Theory is a commonly used form of technical analysi
• There are two types of waves: impulse and corrective. Basic Sequence
Basic Sequence
Basic Sequence
Basic Sequence
Basic Sequence
Three Rules Believe it or not, there are only three rules when it comes to interpreting Elliott Wave. There are many guid
Three Rules
There are numerous guidelines, but this article will focus on three key guidelines. In contrast to rules, guidelines should

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