Four Building Blocks of Technical Trading with EWF Wr | Faminy2nt" Elliott Wave Principle History + Elliott Wave Theory is a form of technical analysis to analyze financial market eycles and forecast trends. It is named after Ralph Nelson Elliott (1871 — 1948). Inspired by the Dow Theory and by observations found throughout nature. Elliott concluded that the movement of the stock market could be predicted by observing and identifying a repetitive pattern of waves. + Elliott noted from his observation that movement in the direction of the trend is always in five waves, labelled as 1, 2, 3, 4, and 5. This is usually called motive wave. Movement against the trend is always in three waves and this is called corrective wave. Three wave corrections are lettered as "a, b, ¢."" Elliott Wave Principle Fractal Nature of Wave + Elliott observed the fractal nature of waves: smaller patterns can be identified within bigger patterns. In this sense, Elliott Waves are like a piece of broccoli, where the smaller piece, if broken off from the bigger piece, does, in fact, look like the big piece. ‘This information (about smaller patterns fitting into bigger patterns), coupled with the Fibonacci relationships between the waves, offers the trader a level of anticipation and/or prediction when searching for and identifying trading opportunities with solid reward/risk ratios" Elliott Wave Principle Five Waves Pattern CComectve Wave (Zigzag) : A wn x ‘ «wy | \A * Wen A iv) ow [hn ™\NA/\R jm iN ALA @ | A cor \/ hy oy \ om \ \V \/ AV ch le eA IN, & to \ w A a «oy /\ hi @ Elliott Wave Forecast co Jeon «an \f we 2 V jmElliott Wave Principle Elliott Wave Degree ° Elliott Wave Forecast Grand Super Cycle = (()) ((N)) (AMA) (€@)) (HCC) CO) (00) (W)) Super Cycle £(D (UD (I) V) (V) a) (D) (c) (w) (%) (Y) Cycle :HIMIIVV abe wxy Primary £19) €€2) (3d) 4) (5) CAD CB) CC) (CMD) (0X) (OM) Intermediate MAGA ABC MOM Minor 112345 ABC WXY Minute (Oa ay up va) Ge). CH) 0 nn) (6 (0) 69) 1iiliiivy abe wxy Minutte ‘Subminutte" Elliott Wave Principle The New Elliott Wave for 21% Century + Today's trading environment is far different than the one jn 1930s when Elliott Wave ‘Theory was invented. Today, we have computer algos and machines trading in seconds or milliseconds purely based on technical, probabilities, and statistics + In today’s environment, the biggest change in our opinion is in the definition of trend and counter-trend move. In today’s market, trends can move both in 3 waves and 5 waves. In other words, trend can move in corrective structures and thus we believe that trends do not have to be in 5 waves." Elliott Wave Principle Fibonacci Ratios Table Denominator Fibonacci Ratio 1 able Elliott Wave, Numerator 1 2 3 s Opa el TOoNCO] — ZNO] —F DOUG] —5 HUGO] —E OOO] TF AOOGO] A UOOGO] TOON. OOOOOT A HOVON|TaA_HONNN| 2.50000] 1.00000] 1.50000) 2.50000] —a.00000) 6.50000] 10.s0000|_17.00000) 27 so000| aa soo00|_72.00000 2.20000] 0.20000] 0.60000] —3.00000] —1.s000o] — 2.60000] ~a.20000] 6.20000] 11.00000] 17-20000] 28.0000 0.12500] 0.25000] 0.37500] 0.62500] 1.00000) 1.62500] 2.9500] a 2s000] 6.7500] 11.19500) 18.0000 0.07692] 0.15325] 0.22077] 0.38460] —o.s1saal 1.00000] —1.s1s3a] 2.01539] 4.22077] aacus| 1.07602 ‘0.04769 0.09524) —o.142ael 0.22810] 0.28005] 0.1905] 1.00000) 1.61905] 2.61905] ~a.22810] — eas7ial 0.02843] 0.05882] 0.08824) 0.14706] 0.23520] 0.38735] 0.51765] 1.00000] 1.61765] —2.6176s] 423526] ‘0.01818 0.03636] 0.05455] 0.09001] —o.14s4s] 0.22636] —o.8182] —o.s18ie) 1.00000) —1.s181a) — 2.61818] '0.01124] 0.97247 0.033731 _0.0561e] 0.08989] 0.14607] 0.29596] 0.382021 0.61799) 1.00000] 1.61798] ‘0.90694 0.01389] 0.02083] 0.03472] 0.05556) 0.05029] 0.14583] 0.29611] 0.38194] 0.61806] —_1.00000 Toward Perfect Ratios1. Elliott Wave Principle Fibonacci Ratios erry Peon 61.8% (0.618) + 261.8% (2.618) 100% (1.00) + 323.6% (3.236) 123.6% (1.236) + 423.6% (4.236) 161.8% (1.618) + 68156 (6.81) 200% (2.00) 14.6% (0246) + 85.496 (0.854) 23,6% (0.236) 38.2% (0.382) 61.8% (0.618) 76.4% (0.764)"Elliott Wave Principle Motive Wave - Impulse @ Elliott Wave Forecast @ rt wm @ oy 1 @ we « wy Jv a” my, ay 2D «en 2 Impulse wave subdivide into 5 waves Wave 1, 3, and 5 subwaves are themselves impulse Wave 2 can't retrace more than the beginning of wave 1 Wave 3 can't be the shortest Wave 4 can't overlap with wave 1 ‘Wave 5 needs to come with momentum divergence + Wave 2 = 50%, 61.8%, 76.4%, oF 85.4% of wave 1 + Wave 3 is typically 161.8% of wave 1-2, but ean also be 200%, 261.8%, 329.0% of wave 1-2 + Wave 4 = 14.6% 29.6% or 38.2% of wave g but no more than 50% + Wave § = wave 1 or 61.8% of wave 1-3, oF 123.6% ~ 161.8% of wave 4i ‘w Ih (Heatly Ha f ih hy Nil Wh |‘Elliott Wave Principle Motive Wave — Impulse with Extension @Etliott Wave Forecast + Extension is elongated impulse Istwareetznson "awe eersion shoe eaersin with exaggerated subdivision + Extension happens in one of the impulse subwaves, either in wave 143,085 + Extension frequently happens in the third wave + Same Fibonacet relationship between waves in Impulse also apply to the extended wave 3 subwaves"Elliott Wave Principle Motive Wave - Leading Diagonal Cemaemetowen + Otten + Special type of motive wave appearing as subdivision of wave 1 inan impulse + Ttean also appear in wave A of a zigzag + Characterized by overlapping wave 1 and 4 and the wedge shape + Each subwaves is subdivided either in §-3-5-3-5 033-333"Elliott Wave Principle Motive Wave - Ending Diagonal Cetstimetonet Cotman Pe Rules + Special type of wave mostly appearing in the fifth wave of an impulse + Itean also appear in wave C of a rigzag + Characterized by overlapping wave rand 4 and the wedge shape + Usually found in termination point ofa larger pattern + Each subwave is subdivided into three (3-3-3-3-3)"Elliott Wave Principle Corrective Wave - Zigzag @etiott Wave Forecast OO) qe) ww) © A corrective 3 waves labelled as ABC + Subdivision of wave A and Care impulse / diagonal + Wave B can be any corrective structure Zigzag is 5-3-5 structure + Wave B= 50%, 61.8%, 76.4% oF 85.4% of wave A + Wave C= 61.8%, 100%, oF 123.6% of wave A + Ifwave C= 161.8% of wave A, it can be an impulse"Elliott Wave Principle Corrective Structure - Flats Detiot wove Forecast 8 ow wo «ay w rs -” ma o Irregular / Expanded Flat @eetiott wave Forecast wo - e w wy ny ww Running Flat"Elliott Wave Principle Corrective Wave - Regular Flat @ Elliott Wave Forecast B (wy) «ay @w «qii)) coo wy) c a corrective 3 waves labelled as ABC Subdivision of wave A and B is in 3 waves Subdivision of wave Cis in 5 waves ‘Wave B terminates near the start of wave A ‘Wave € generally terminates slightly beyond the end of wave A ‘Wave C must have momentum divergence Wave B = 50%, 61.8%, 76.4% or 85.4% of wave A Wave C = 61.8% - 123.6% of wave AB"Elliott Wave Principle Corrective Wave — Expanded Flat @ Etiott wave Forecast corrective 3 waves labelled as ABC Subdivision of wave A and B is in 3 waves Subdivision of wave C is in 5 waves ‘Wave B terminates beyond the starting level ofwave A. + Wave C ends substantially beyond the ending. level of wave A. + Wave C must have momentum divergence B wm «ayy + Wave B = 123.6% of wave A. + Wave on = 123.6% - 161.8% of wave AB o"Elliott Wave Principle Corrective Wave — Running Flat @ Elliott Wave Forecast B «y) ai) @ — @w) ivy) (qw)) (@) aii) @w) (w) c A Rul A corrective 3 waves labelled as ABC Subdivision of wave A and B is in 3 waves Subdivision of wave Cis in 5 waves Wave B terminates substantially beyond the starting level of wave A Wave C travels full distance, falling short of the level where wave A ended ‘Wave C must have momentum divergence res Wave 123.6% of wave A Wave C = 61.8% - 100% of wave AB"Elliott Wave Principle Corrective Structure — Triangle w Pane reas een ee ae See"Elliott Wave Principle Corrective Structure — Triangle + Corrective structure labelled as ABCDE + Usually happens in wave Boor wave 4 + Subdivided into three (3-3-3-3-3) + RSLalso needs to support the triangle in every time frame + Subdivision of ABCDE can be either ABC, WXY, or Flat%FDAX 1HEUX, DAX, 60 (Dynamic) (delayed 15) A Wa | ae | hy ot ll WlWFDAX 1HEUX, DAX, 60 (Oynamic) (delayed 18) I iv SW"Elliott Wave Principle Corrective Wave — Double Three (Flat & Zigzag) Covi vineroncast x + combination of two corrective structures «ey labelled as WXY (on + Wave W and wave Y subdivision can be wy | \A Zigzag, flat, double three, triple three + Wave X can be any corrective structure + WXYisa7 swing structure @ @ @ ie Wave Fee tee 2028 wave W + Wave ¥ = 61.8%, 100%, or 123.6% of wave W Wave Y does not pass 161.8% of wave W[GaP AG FX, SUS/BRITISH POUND COMPOSITE, 60 (Dynamic) ia " it I i rae a, 1 ih i i pity MM hy fy A " I i wl} il “Tal! 4 i ht il ue"Elliott Wave Principle Corrective Wave — Double Three (Flat & Triangle) @Etliott Wave Forecast . / " ow / Wy nu \ a/M a | . = — | a A combination of two corrective structures labelled as WXY_ ‘Wave W and wave Y subdivision can be zigzag, flat, double three, triple three Wave X can be any corrective structure WY is a7 swing structure Wave X = 50%, 61.8%, 76.4%, oF 85.4% of wave W Wave Y = 61.8%, 100%, oF 123.6% of wave W Wave ¥ does not pass 161.8% of wave W"Elliott Wave Principle Corrective Wave — Double Three (double three & double three) @etiott wave Forecast Vy oy wo /\ i n/ \A on) ome” V/V AVA on bs V 4 wm) ‘double three: - ‘double three Fe ct + Acombination of two corrective structures labelled as WXY + Wave W and wave ¥ subdivision can be zigzag, flat, double three, triple three + Wave X ean be any corrective structure + WXY isa 7 swing structure SEES Conny ‘Wave X = 50%, 61.8%, 76.4%, of 85.4% of wave W + Wave ¥ = 61.8%, 100%, or 129.6% of wave W + Wave ¥ does not pass 161.8% of wave W‘Elliott Wave Principle Corrective Wave ~ Triple Three (Flat, double three, and zig zag) @retiott wave Forecast Nv A” & \W\pA eA, / oe WA ay / " Vs Pe fo, | satetine |B zee Acombination of three corrective structures labelled as WXYXZ ‘Wave W, Y, and Z subdivision can be zigzag, flat, double three, triple three ‘Wave X can be any corrective structure WRY is an 11 swing strueture Fibonacci Relationship Wave X = 50%, 61.8%, 76.4%, or 85.4% of wave W Wave Z = 61.8%, 100%, or 123.6% of wave W ‘Wave ¥ does not pass 161.8% of wave W"Elliott Wave Principle Corrective Wave — Double Three (double three & double three) Eliott Wave Forecast S + Acombination of two corrective structures i labelled as WXY oe «on + Wave Wand wave ¥ subdivision ean be «ey w zigzag, flat, double three, triple three " + Wave X can be any corrective structure Mv + WXYis a7 swing structure uM eer + Wave X = 50%, 61.8%, 76.4%, or 85.4% of wave W + Wave Y = 61.8%, 100%, of 123.6% of wave W Wave Y does not pass 161.8% of wave W any covblettree | ANY