Identifying Elliott Wave Patterns

So, I prepared this article to explain why I am seeing abnormalities in these Elliott Wave counts and what are my probable Elliott Wave counts for the same chart with reasons, logics, calculations and trading strategy.

You may have a few degrees of extensions within one impulse wave.

But in this chart, waves are going out of wedge green lines. The analysis of these patterns will allow you to look at the possibilities of upcoming price action probabilities.

The Characters of Each Wave New Bull Trend Example In its simplest form, moves in the direction of the trend unfold in 5-waves and counter-trend moves happen in 3-wave structures. Moves in the direction of the trend will be numbered on the chart and called impulse waves. Moves against the trend will be called correction and are lettered below. After this breakdown, you will see how we can use MACD to clearly recognize Wave 3 so that you can pinpoint corrections. Basing move, price is moving higher even with bad news, seen as noise off the trend Wave 2: Many convinced the bear trend is back Wave 3: Corrective Wave that will be different than Wave 2 and stall excitement of Wave 3.

Key correction, will tip you on what type of correction to expect, can be 5 or 3 waves Wave B: The corrective sibling of Wave 3. The concept that she did a great job of recognizing is that the third wave of an impulse is easiest to see via an oscillator. Note how the two phases of trend — motive and corrective — fit together to form the whole pattern. The above-shown chart depicts a very clear impulsive five, labeled , followed by the corresponding three-wave retracement, which, in this case, takes the form of a double zig-zag, marked with w-x-y.

This example shows how the correction starts after the end of the impulse. Now we will demonstrate how the impulsive phase begins after the end of the correction. Note that in the first case, the corrective phase starts from the extreme top of wave 5, while in the second one, the motive phase starts from the extreme bottom of the wave Y.

That is how we put the two pieces of the puzzle together. It probably looks quite easy so far. But what happens if you spot an impulse on a chart with the idea to wait for the retracement and attack the trend resumption, but it never comes? Having a clear five-wave rally, you would assume that a correction is in progress. After its end you would expect the uptrend to continue.

This is what happens instead: Prices fall much lower than expected and the bullish scenario is ruined. Those, who have just started learning the Elliott Wave Principle, would probably blame it on the method immediately. On the other hand, the minority, that had spent enough time studying it, would go to a bigger time frame, in order to see the whole forest, not only the surrounding trees.

And the bigger time frame makes it clear.

The Elliott Wave Principle gives best results only when correctly applied. Once mastered, it becomes a beautiful symbiosis between art and science.

To trade Elliott Wave, you need to know where to start your count & MACD can help! We use a range of cookies to give you the best possible browsing experience. By continuing to use this website. Elliott Wave Theory (How To Trade Elliott Waves In 6 Simple Steps) The Elliott wave theory, (or some call it the Elliott Wave Principle) Elliott wave analysis and how to trade Elliott Waves can be a mind boggling trading concept to understand especially for a .