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Wavetheory

Can You Use Math to Elevate Your Trading Strategy?In the world of trading, understanding market movements is crucial for success. One of the most effective frameworks for interpreting these movements is Wave Theory, a concept that helps traders identify price trends and potential reversals. By incorporating mathematical projections, traders can enhance their analysis and make informed decisions. In this article, we’ll explore the fundamentals of Wave Theory and demonstrate how to project price movements using wave measurements—specifically, measuring Wave 1 to project the size of Wave 3. Understanding Wave Theory Wave Theory, popularized by Ralph Nelson Elliott, posits that financial markets move in repetitive cycles or waves, driven by collective investor psychology. Elliott identified two primary types of waves: Impulse Waves: These are the waves that move in the direction of the prevailing trend, typically comprising five waves (labeled 1, 2, 3, 4, and 5). Corrective Waves: These waves move against the prevailing trend and consist of three waves (labeled A, B, and C). In a typical bullish market, you will observe a series of impulse waves followed by corrective waves. Understanding these waves allows traders to identify potential entry and exit points based on price patterns. The Mathematics Behind Wave Projections One of the key aspects of Wave Theory is using mathematical relationships to predict future price movements. A common approach is to measure the length of Wave 1 and use that measurement to project the size of Wave 3. Research indicates that Wave 3 often ranges between 1.0 to 1.68 times the length of Wave 1. Steps to Project Wave 3: Identify Wave 1: Begin by determining the starting point of Wave 1 and measuring its length. This can be done by noting the price levels at the start and end of Wave 1. Calculate the Length of Wave 1: Length of Wave 1 = End Price of Wave 1 - Start Price of Wave 1. Project Wave 3: To project Wave 3, multiply the length of Wave 1 by the desired factor (1.0 to 1.68). Projected Length of Wave 3 = Length of Wave 1 × (1.0 to 1.68). Determine the Target Price: Add the projected length of Wave 3 to the endpoint of Wave 2 to determine the target price for Wave 3. Target Price = End Price of Wave 2 + Projected Length of Wave 3. Example: Applying Wave Theory in a Trading Scenario Let’s say we’re analyzing a stock and identify Wave 1 as follows: Start of Wave 1: $50 End of Wave 1: $70 Step 1: Measure Wave 1: Length of Wave 1 = $70 - $50 = $20 Step 2: Project Wave 3: Using the range of 1.0 to 1.68: Minimum Projection = $20 × 1.0 = $20 Maximum Projection = $20 × 1.68 = $33.60 Step 3: Determine the Target Price: Assuming Wave 2 has an endpoint of $80: Minimum Target Price = $80 + $20 = $100 Maximum Target Price = $80 + $33.60 = $113.60 Thus, based on Wave Theory, we would anticipate that Wave 3 could reach between $100 and $113.60. Wave Theory, combined with mathematical projections, provides traders with a structured approach to understanding market dynamics and predicting future price movements. By accurately measuring Wave 1 and projecting Wave 3, traders can make informed decisions based on calculated price targets, improving their chances of success in the financial markets. As you incorporate Wave Theory into your trading strategy, remember that no system is foolproof. Always combine technical analysis with sound risk management practices to protect your capital. With patience, discipline, and a strong mathematical foundation, you can leverage Wave Theory to enhance your trading prowess and navigate the markets with greater confidence. How can you see yourself incorporating mathematical projections like Wave Theory into your trading strategy, and what has been your experience with predicting market movements using these techniques? Let me know in the comments. Happy trading!
Education
by TLTurnerTV
Wave Theory in Motion: Understanding Key PatternsElliott Wave Analysis: Example used chart of Eicher Motors (NSE: EICHERMOTORS) This analysis is provided for educational purposes only and does not constitute trading or investment advice. All wave counts are subject to change as the market evolves. Always consult with a qualified financial advisor before making any trading decisions. Overview: In this analysis, we will delve into the current market structure of Eicher Motors through the lens of Elliott Wave Theory. The focus will be on identifying the wave count, potential price targets, and critical invalidation levels. Wave Count: Starting from the low at 4253, we have a clear impulsive structure labeled as wave (i). This wave consists of five smaller sub-waves, denoted by i, ii, iii, iv, v. The subsequent correction, wave (ii), retraced part of this impulsive move, unfolding in a typical corrective pattern, which then led to wave (iii). This wave extended higher, reflecting strong bullish momentum, followed by waves (iv) and (v) completing the impulsive sequence near 4976 where we had labelled as wave 3 completed. From there, an Expanded Flat corrective structure began, identified as a ((a))-((b))-((c)) pattern, which seems to have completed near ₹4,548. This marks the end of wave 4, a corrective wave within a larger impulsive sequence. Currently, the stock appears to be in the early stages of a new impulsive wave, labeled as wave (i) of a higher-degree wave ((i)) of one more higher degree wave 5. Elliott waves Theory based Target Assumptions: Given that wave 3 of the previous impulsive move ended around 4976, we anticipate that wave 5 should extend beyond this level. The first target for wave 5 would be around 5000, If momentum is strong, we could see further extensions. Invalidation Levels: Critical to any Elliott Wave analysis is understanding where the wave count might be invalidated: Nearest Invalidation Level: A break below 4548 would invalidate the assumption that wave (v) of wave C has completed. This would suggest that the corrective wave 4 is still ongoing or that a different corrective structure is forming. Main Invalidation Level: Should the price fall below 4253.85, it would invalidate the entire bullish wave count, implying that a much larger corrective pattern is unfolding, or a change in the trend direction is occurring. Conclusion: Eicher Motors is showing signs of a potential new impulsive move to the upside, However, traders should keep a close eye on the invalidation levels at 4548 and 4253.85. Breaching these levels would require a reevaluation of the current wave structure and could signal a deeper correction. I am not Sebi registered analyst. My studies are for educational purpose only. Please Consult your financial advisor before trading or investing. I am not responsible for any kinds of your profits and your losses. Most investors treat trading as a hobby because they have a full-time job doing something else. However, If you treat trading like a business, it will pay you like a business. If you treat like a hobby, hobbies don't pay, they cost you...! Hope this post is helpful to community Thanks RK💕 Disclaimer and Risk Warning. The analysis and discussion provided on in.tradingview.com is intended for educational purposes only and should not be relied upon for trading decisions. RK_Charts is not an investment adviser and the information provided here should not be taken as professional investment advice. Before buying or selling any investments, securities, or precious metals, it is recommended that you conduct your own due diligence. RK_Charts does not share in your profits and will not take responsibility for any losses you may incur. So Please Consult your financial advisor before trading or investing.
NSE:EICHERMOTEducation
by RK_Chaarts
📍Part #1, Elliott Waves: "Introduction. Classification".Hello! Dear colleagues, because I am constantly analyzing the markets with the help of wave analysis. Many colleagues ask me about it and I decided to make some tutorial posts to help you in this difficult task. I want to present this information to you in a simple and straightforward manner. Well, enough unnecessary text, let's get started! A bit of history from Wikipedia. Ralph Nelson Elliott (1871-1948), an American accountant, developed a model for the underlying social principles of financial markets by studying their price movements, and developed a set of analytical tools in the 1930s. He proposed that market prices unfold in specific patterns, which practitioners today call Elliott waves, or simply waves. Elliott stated that "because man is subject to rhythmical procedure, calculations having to do with his activities can be projected far into the future with a justification and certainty heretofore unattainable." In simple words, human behavior is quite predictable. And since it is mostly people who trade on the markets, we can predict its movement with some probability. Well. Let's explore what these waves are. Let's start by categorizing them. The movements are mostly carried out by a five-wave structure. 📍 Modes: Motive & Corrective Waves unfold in two distinct forms: motive and corrective. Motive waves exhibit a five-wave structure, featuring both a five-wave model and its co-directional components—waves 1, 3, and 5. The term "motive" is attributed to this structure due to its inherent ability to energize and set the market in motion. On the other hand, corrective waves, prevalent in countertrend movements, follow a three-wave structure or its variations. The name "corrective" stems from their nature as responses to preceding motive waves, executing partial retracements or "corrections" of the prior progress. Hence, these two wave types stand apart not only in their roles but also in their fundamental construction. Motive 📍 Styles: Impulse & Diagonal. There are two types of motive waves: impulse and diagonal. As a rule, they alternate in the position of waves 1-5 impulses and waves A-C of the zigzag. 📍 Patterns: Impulse, Leading Diagonal & Ending Diagonal Five-wave action model. Creates forward progress.Motive waves are limited to three patterns: Impulse, Leading and Ending Diagonals. Corrective 📍 Groups: Simple & Combined The corrective mode has two groups, simple and combined. Combined corrections are subdivided into simple corrective structures. The group of simple corrections includes: flat, triangle and single zigzag. Combined group — multiple zigzag and combination. 📍 Styles: Sharp & Sideways There are two styles of corrective processes: sharp and sideways. If wave two of an impulse is a sharp correction, expect wave four to be a sideways correction, and vice versa. 📍 Patterns: Flat, Triangle, Single Zigzag, Multiple Zigzag and Combination 📍 Three-wave or five-wave (which have characteristics of both fives and threes) or their combination model of counteraction. Always produces a net retracement from the previous wave. Corrective patterns include: single and multiple zigzags, triangle, flat, combination. Variations 📍Divergences in Elliott Wave patterns manifest in two conditional categories: variations in form and variations in the quantity of simple structures. Impulses, diagonals, flats, triangles, and single zigzags are distinguished by the proportional length of their sub-waves, shaping the model uniquely. On the other hand, combined corrections, incorporating multiple zigzags and combinations, maintain a consistent shape, and their identification is based on the count of simple corrective structures they encompass. This was an introductory lesson on Elliott waves. Further we will examine each type and subspecies of waves in detail in a separate lesson! 🔔 Click on the links below this lesson! 🔔
Education
by Hellena_Trade
22
📍Part # 8, Combination - Corrective Waves.👩🏻‍💻 Hello ! This time we're going to look at combinations. It may seem too complicated, but don't worry. In fact, any combination simply consists of two corrective patterns that you and I already know, only between these two patterns there is a connecting wave. Let's go straight to the rules and everything will become clear to you at once! ✅ Rules ✅ 📍A “double three” combination comprises two corrective patterns separated by one corrective pattern in the opposite direction, labeled 'X'. The first corrective pattern is labeled 'W', the second 'Y'. 📍A "double three" combination comprises (in order) a zigzag and a flat, a flat and a zigzag, a flat and a flat, a zigzag and a triangle or a flat and a triangle. 📍Wave 'X' appears as a zigzag or flat. 📍Wave 'X' always retraces at least 90 percent of wave 'W'. 📍Combinations have a sideways look. With respect to waves 'W' and 'Y' in a double three, only one of those waves in each type of combination appears as a single zigzag. 📍Combinations can occur in the same wave positions as flats and triangles (except for the triangle subwave) but cannot occur in waves 'W' and 'Y'. ✅ Guidelines ✅ 📍Wave 'X' is often 123.6-138.2% the 'W' wavelength, less often wave 'X' retraces 161.8% or more. Don't expect wave 'X' to be more than 261.8% of wave 'W'. 📍Wave 'X' is usually a single or multiple zigzag. 📍When a zigzag or flat appears too small to be the entire wave with respect to the preceding wave (or, if it is to be wave '4', the preceding wave '2'), a combination is likely. Thank you for your attention! There will be another lecture next week! Don't miss it! 🔔 Links to other lessons in related ideas. 🔔
Education
by Hellena_Trade
3
📍Part #7, Multiple Zigzag - Corrective Waves - Combined.👩🏻‍💻Hello! Dear colleagues, this is the 7th lesson on wave analysis and today we are going to look at Multiple Zigzag. We already know what a Zigzag is, so we will not look at this pattern for a long time, but just to clarify that Multiple Zigzag consists of several Zigzags. Let's get to the rules and guidelines! ✅ Rules ✅ 📍A Multiple Zigzag comprise two (or three) single zigzags separated by one (or two) corrective pattern(s) in the opposite direction, labeled "X". In the first case, it is called «double zigzag», in the second - «triple zigzag» (The first single zigzag is labeled "W", the second "Y", and the third, if there is one, "Z".) 📍Waves "W", "Y" and "Z" are always single zigzags. 📍Wave "X" never goes beyond the beginning of waves "W" and "Y". 📍Wave "Y" always ends past the end of the "W", and wave "Z", if any, always ends past the end of the "Y". 📍The first "X" wave always ends on the territory of the "W" wave, the second "X", if any, on the territory of the "Y" wave. 📍In a triple zigzag, the first "X" wave is always a zigzag, flat or combination. The second "X" wave is always a zigzag, flat, triangle or combination. 📍In a double zigzag, wave "X" is always a zigzag, flat, triangle, or combination. 📍Double and triple zigzags replace single zigzags, but cannot appear as "W", "Y", or "Z" waves. ✅ Guidelines ✅ 📍In a double zigzag, wave "Y" can equal wave "W", .618 wave "W", 1.618 wave "W", or terminate at a distance equal to 1.618 wave "W" past wave "W". In a triple zigzag, there can be equality among waves "W", "Y" and "Z", or wave "Z" can equal 1.618 wave "Y", 1.618 wave "Y", or terminate at a distance equal to 1.618 wave "Y", past wave "Y". In a triple zigzag, the Fibonacci relationships between waves "W" and "Y", would be the same as a double zigzag. 📍The Fibonacci relationships between waves "W" and "X" in a double zigzag, and waves "Y" and "XX" in a triple zigzag are analogous to the relationships between waves "A" and "B" in a single zigzag. 📍In a double zigzag, as a guideline, wave "b" of wave "Y" should not break the trendline that connects the beginning of wave "W" with the end of wave "X". 📍As a guideline, wave "X" (second wave "X" of the triple zigzag) of a double zigzag should break the trend channel formed by the first zigzag in wave "W" ("Y") and be greater than 80% of subwave "b" of wave "W" ("Y" and "Z"). 📍When a zigzag appears too small to be the entire wave with respect to the preceding wave (or, if it is to be wave "4", the preceding wave "2"), the complication of the structure to a multiple zigzag will probably follow. Thank you for your attention! There will be another lecture next week! Don't miss it! 🔔 Links to other lessons in related ideas. 🔔
Education
by Hellena_Trade
📍Part #6, FLAT - Corrective Waves-Simple-Sideways corrections.👩🏻‍💻Hello! In this lecture, we will cover one of the options for corrective cycles, namely Flat. Let's now look at the 'flat' separately as a stand-alone correctional structure. I remind you, 'flat' and 'plane' are essentially the same thing. So, the 'flat' always has a three-wave structure, and it looks like this: 3-3-5. That is, you can identify it by the third wave "C", which always has a five-wave structure. But it can also be a Ending diagonal. And all this will be within the scope of a regular 'flat' or 'plane'. If we draw a line from the base of wave A and the maximum of wave "B", and then also draw a line or level from the end of wave "A" and the end of wave "C", we will get parallel lines, which is exactly what the name Flat hints. And this wave "B" should roll back approximately 90% of wave "A" for everything to look nice. But not always, because there is also an expanded 'flat' and a running 'flat', whichever you prefer. Well then. Let's look at the main rules and guiding norms for flats. ✅General rules✅ 📍A flat always subdivides into three waves. 📍Wave "A" is always a zigzag, flat or combination. 📍Wave "B" is always a zigzag. 📍Wave "C" is always an impulse or a ending diagonal. ✅General guidelines✅ 📍Wave "A" is usually a zigzag. ✅Regular Flat✅ Rules 📍Wave "B" never goes beyond beyond the start of wave "A". 📍Wave "B" always retraces at least 90 percent of wave "A". 📍Wave "C" always ends past the end of wave "A". Guidelines 📍The rarest type of flat correction. ✅Expanded Flat✅ Rules 📍Wave "B" always ends after the start of wave "A". 📍Wave "C" always ends past the end of wave "A". Guidelines 📍Wave "B" usually retraces 123.6 or 138.2% of wave "A", less often — 161.8%. 📍Wave "C" is often equal to 161.8% of wave "A", less often — 261.8%. 📍The most common type of flat correction. ✅Running Flat✅ Rules 📍Wave "B" always ends after the start of wave "A". 📍Wave "C" never goes beyond the end of wave "A". Guidelines 📍Within such a flat wave "B" should end well above the origin of wave "A" and that means wave "C" might reflect a 61.8% or even a 100% relationship to wave "A". 📍A running flat indicates that the forces in the direction of the larger trend at next higher degree are powerful. 📍Wave "B" is usually no more than twice the length of wave "A". Keep in mind that a running flat is rare. Thank you for your attention! There will be another lecture next week! Don't miss it! 🔔Links to other lessons in related ideas.🔔
Education
by Hellena_Trade
1
📍Part 5: Corrective Waves - Simple - Triangle.Hello! ➡️In this lecture, we will cover one of the most common or popular correction options - triangles. I remind you that we are now considering various correction structures that are encountered both separately and can be part of more complex structures. ➡️Triangles are probably the most popular pattern for all beginners, yes, and not only beginners. It is quite often seen on the chart and most likely everyone tried to trade it according to classical recommendations, for example from books or a course, when essentially everything comes down to breaking dynamic resistance on one of the sides where you buy or sell. ➡️In history, everything looks pretty harmonious as usual, but in real-time, it turns out to be not that simple, and here maybe just the rules from wave analysis will help to avoid a certain number of errors. ➡️So let's take a look at the main rules and guiding norms for triangles! ✅ General Rules ✅ 📍A triangle always subdivides into five waves. 📍At least four waves among waves "a", "b", "c", "d" and "e" are subdivided into a single zigzag. 📍In a triangle, only one subwave can be a multiple zigzag or triangle. ✅ General guidelines ✅ 📍Usually, wave "c" or wave "d" subdivides into a "multiple zigzag" that is longer lasting and contains deeper percentage retracements than each of the other subwaves. 📍Alternating waves of a triangle may be in Fibonacci proportion to each other by a ratio of 0.618 for contracting triangles and 1.618 for expanding triangles. For example, in a contracting triangle, look for wave "c" to equal 0.618 of wave "a". 📍A triangle can be correction wave "4" in the impuls, wave "b" of a zigzag, wave "x" of a double or second wave of an "x" of a triple zigzag, sub-wave "c", "d" or "e" of a triangle and the last structure of a combination. ✅ Contracting Triangle ✅ Rules 📍Wave "c" never moves beyond the end of wave "a", wave "d" never moves beyond the end of wave "b", and wave "e" never moves beyond the end of wave "c". The result is that going forward in time, a line connecting the ends of waves "b" and "d" converges with a line connecting the ends of waves "a" and "c". 📍Waves "a" and "b" never subdivide into a triangle. 📍In a running contracting triangle, wave "b" should be no more than twice as long as wave "a". Guidelines 📍Sometimes one of the waves, usually wave "c", "d" or "e", subdivides into a contracting or barrier triangle. Often the effect is as if the entire triangle consisted of nine zigzags. 📍About 60% of the time, wave "b" goes beyond the beyond the start of wave "a". When this happens, the triangle is called a running contracting triangle. ✅ Barrier Triangle ✅ Rules 📍Wave "c" never moves beyond the end of wave "a", wave "d" never moves beyond the end of wave "b", and wave "e" never moves beyond the end of wave "c". The result is that going forward in time, a line connecting the ends of waves "b" and "d" converges with a line connecting the ends of waves "a" and "c". 📍Waves "b" and "d" end at essentially the same level. 📍In a running barrier triangle, wave "b" should be no more than twice as long as wave "a". Guidelines 📍About 60% of the time, wave "b" goes beyond the start of wave "a". When this happens, the triangle is called a running barrier triangle. 📍When wave "5" follows a barrier triangle, it is typically either a brief, rapid movement or an exceptionally long extension. ✅ Expanding Triangle ✅ Rules 📍Wave "c", "d" and "e" each moves beyond the end of the preceding same-directional subwave. (The result is that going forward in time, a line connecting the ends of waves "b" and "d" diverges from a line connecting the ends of waves "a" and "c.") 📍Subwaves "b", "c" and "d" each retrace at least 100 percent but no more than 150 percent of the preceding subwave. Guidelines 📍Subwaves "b", "c" and "d" usually retrace 105 to 125 percent of the preceding subwave.
Education
by Hellena_Trade
2
📍 Part 4. Corrective Waves- Simple Zigzags - Sharp Corrections.👩🏻‍💻 Welcome to the 4th lecture on Elliott Waves! ➡️In this lecture, we will start discussing the variations for corrective movements. Let's begin with the simplest one - it's zigzags. ➡️By correction, we mean the construction "ABC" after an impulse. This reminds us of a zigzag, hence the name. Also, we can encounter it in each corrective wave, that is, "2" and "4" - it's the simplest and most common form of correction. ➡️As you recall from previous lectures, for waves "A" and "C," there are variations in the form of Leading and Ending Diagonals, and the same applies to "B," namely flat, zigzag, triangle, or even a combination, i.e., any three-wave pattern. Here it's worth remembering that wave structure is fractal, and there's no need to be afraid, just like with variations for impulses, namely leading and ending diagonals. ➡️Zigzags can often be embedded into a parallel channel. We've dealt with a simple zigzag. Most likely, your main questions are about variations for "B": flat, zigzag, triangle, or combination. On the cover of the learning materials, you will find the main variations of simple zigzags. Keep and use them! 📍 Let's look at the main rules and guidelines! 📍 📍 Guidelines: 📍 📍In a zigzag, wavelength "C" can be equal to wavelength "A". 📍Wave "B" is usually corrected at 38.2% - 78.6% of the length of wave "A". 📍If wave "B" is a triangle, is usually corrected at 38,2% - 50% of the length of wave "A". 📍If wave "B" is a zigzag, is usually corrected at 50% - 78.6% percent of wave "A". 📍In a zigzag, if wave "A" is a leading diagonal, then we would not expect to see an ending diagonal for wave "C". 📍A line connecting the ends of waves "A" and "C" is often parallel to a line connecting the end of wave "B" and the start of wave "A". (Forecasting guideline: Wave "C" often ends upon reaching a line drawn from the end of wave "A" that is parallel to a line connecting the start of wave "A" and the end of wave "B".) 📍Waves "A" and "C" within the zigzag often appear in the form of impulses, but more often alternate according to the type of motive waves: if wave "A" is an impulse, expect wave "C" in the form of a diagonal, and vice versa. It is much less common to find waves "A" and "C" in the form of diagonals. Thank you for your attention! There will be another lecture next week! Don't miss it! 🔔 Links to other lessons in related ideas. 🔔
Education
by Hellena_Trade
4
📍Part 3. Motive Waves - Leading & Ending Diagonals.👩🏻‍💻Welcome to the 3nd lecture on Elliott Waves! ➡️In this lecture, I will talk about the Leading and Ending diagonals as the primary and most common variations of impulsive waves. We will also touch on the Expanding diagonal, which occurs significantly less frequently. Earlier, we covered the general concept of impulse and its structure. Now, I will specifically discuss the variations of impulses and, namely, for waves "1", "5", as well as corrective waves "A" and "C". ➡️Let's start with variations for the first wave in the impulse and correction. This is the Leading diagonal. This structure may remind you of an ascending triangle, and essentially, that's what it is. The first wave itself implies that before this, we were moving in the opposite direction. So, if wave 1 is ascending, it means there was a certain descending movement before it. And it's obvious that in this descending movement, sales prevailed. Thus, reversing the price in the opposite direction may not be so easy. In such cases, when it's not easy, we get not a sharp 5-wave impulse but a Leading diagonal, where conditional buyers, as it were, chew their way upwards. ➡️Next, of course, there is correction and further growth. The Leading diagonal can also be encountered in wave a of correction "ABC". And here, the logic remains the same since the correction goes in the opposite direction of the trend; we have significant support for demand. In our example, this is an ascending trend. Therefore, we don't get a sharp impulse, but gradually, and squeezing, which forms the structure of the Leading diagonal. ➡️As you already understand, waves "2" or "4" also have a correctional structure "ABC", where "A" can also be a Leading diagonal. And then, you can encounter the Leading diagonal in wave "1" and in wave "A", and since they reverse the direction of movement, the structure is not formed like a sharp impulse but more like an ascending triangle in the case of wave "1" and a descending triangle in the case of corrective wave "A". ➡️Moving on to the Ending diagonals. You can get them in wave "5" and wave c in the corrective structure "ABC". Here the principle is similar, as you might have guessed, to the case of wave "5". We see how the ascending movement fades, as if the buyers no longer have the strength to move the price, impulsively upwards, I remind you, we are considering an example of an ascending trend movement. ➡️You can encounter the Ending diagonal in wave "5" and wave "C". It turns out everything is quite logical and simple. Wave "1" starts the impulse, and wave "A" starts the correction. Wave "1" starts the impulse, and wave "A" starts the correction. In turn, wave "5" completes the impulse, and wave "C" completes the correction. ➡️Well, now we need to understand the rules for the Leading and Ending diagonals to determine them correctly. ➡️Now let's look at the rules separately for Contracting diagonals! 📍 Rules 📍 📍In the contracting variety, wave "3" is always shorter than wave "1", wave "4" is always shorter than wave "2", and wave "5" is always shorter than wave "3" (1 > 3 > 5 and 2 > 4). 📍Going forward in time, a line connecting the ends of waves 2 and 4 converges towards with the line connecting the ends of waves "1" and "3". 📍 Guidelines 📍 📍In the contracting variety, wave "5" ends beyond the end of wave "3" (only for the Leading diagonals). 📍In the contracting variety, wave "5" ends beyond the end of wave "3" or does not reach the end of wave "3": truncation (only for the Ending diagonals). 📍In the contracting variety, wave "5" usually ends at or slightly beyond a line that connects the ends of waves "1" and "3" (Ending beyond that line is called a throw-over). 📣This concludes the lecture on impulse waves. Save the images and practice. Next week I'll talking about the Corrective Waves - Simple - Sharp Corrections. 🔔 Links to other lessons in related ideas. 🔔
Education
by Hellena_Trade
1
📍Part #2, Elliott Waves: "Motive Waves - Impulse".👩🏻‍💻 Welcome to the 2nd lecture on Elliott Waves. So, Elliott Wave Theory suggests that price behavior follows a wave structure, with three waves being impulse waves and 2 being corrective waves. It can be said that these 5 waves look like the image above. ➡️For example, let's take an upward impulse, where the impulse refers to all these five waves. We observe the first wave of growth, then the second wave is corrective to the first, meaning the second wave is specifically a correction for the first wave. Next, the third wave is a growth wave, the fourth is corrective for the third, and the fifth wave concludes the impulse. Following the completion of the impulse or the five-wave sequence, a correction occurs in the form of A, B, C. ➡️This entire structure is fractal, meaning that if our upward impulse has three waves, and they are also impulse waves, such as the first, third, and fifth, and as impulse waves, as we already know, consist of five waves, then each impulse within this larger five-wave sequence has the same structure of five waves. Furthermore, in the correction A, B, C, waves A and C also have a five-wave structure, but more on that in the next lessons. ➡️If you ask about the timeframes to work with waves, I would say that the 1-hour timeframe is the threshold below which it is not recommended to consider the structure! Next, I will describe the basic rules and regulations concerning impulses in the form of pictures, which are convenient to save and use as a hint when analyzing charts. ➡️Now let's consider some rules that are mandatory for all impulse movements. Rules An impulse always subdivides into five waves. Strong guidelines 📍Wave A almost always will alternate with wave B. Alternation can be expressed in two ways: 1) In the type of correction: sharp/sideways or vice versa 2) In the presence of extension: in waves 2 and 4 of the impulse, two sideways patterns are possible, but only one of them will have an extreme beyond the peak of the previous wave. 📍Wave 4, as a rule, significantly violates the channel formed by the subwaves of wave 3. 📍As a strong norm, no part of wave 4 should enter the price territory of wave 1 or 2. 📍As a strong norm, the peak of wave 4 should not extend beyond the doubled channel constructed from the peaks of waves 1, 2, and 3, while the midline of the channel will serve as the minimum achievable target. 📍Second waves of impulses tend to go beyond the previous fourth wave. When using this norm, the previous fourth wave serves as the minimum target. 📍Sometimes wave 5 does not move beyond the end of wave 3 (in which case it is called a truncation). 📍Often, waves 1 and 5 of the impulse form impulses, but more often they alternate in the type of motive waves: if wave 1 is an impulse, expect wave 5 in the form of a diagonal, and vice versa. Less commonly, waves 1 and 5 form diagonals, but in this case, alternation will be expressed in the form of a pattern: contracting/expanding. So there are also many other lesser indications, but they are too numerous and less frequent. Therefore, I recommend that we focus on the main ones for the time being. 📣This concludes the lecture on impulse waves. Save the images and practice. Next week I'll start talking about the Leading and Ending diagonals. 🔔 Links to other lessons in related ideas. 🔔
Education
by Hellena_Trade
11
Elliott Waves: Natural Gas case study Overview: Since the significant bottom in June 2020, Natural Gas embarked on a compelling journey, forming a fresh impulse that concluded around the highs of August 2022 as Wave I in the Cycle Degree. The subsequent phase witnessed a corrective move, labeled as Wave II on the weekly timeframe, comprising three subdivisions: ((A)), ((B)), and ((C)). The current focus is on the ongoing Wave ((C)) on the Daily timeframe, expected to unfold in five subdivisions: (1), (2), (3), (4), and (5). Within this framework, Wave (1) to (4) are complete, and attention now turns to the unfolding of Wave (5) on the Four-Hourly timeframe. Current Structure: On the Four-Hourly timeframe, Natural Gas is in the process of forming Wave (5), consisting of Wave 1, 2, and the ongoing development of Wave 3. The details of Wave 3 are further observed on the Hourly timeframe as finished wave ((i)) & ((ii)) and now possibly we are unfolding Wave ((iii)) of 3 of (5) of ((C)) of II. Elliott Wave Principles: Corrective Structure: Wave II is corrective, manifesting as a complex correction with three subdivisions, labeled ((A)), ((B)), and ((C)). Impulse Formation: The primary upward movement from June 2020 to August 2022 represents an impulse, characterized by a sequence of five waves. Subdivision Details: Each wave and subdivision unfolds according to Elliott Wave principles, maintaining the structural integrity of the overall pattern. Learning Points: Analyzing Market Cycles: Elliott Wave Analysis serves as a valuable tool for understanding the cyclical nature of markets, providing insights into the psychology of both buyers and sellers. Trend Anticipation: Corrective waves within the Elliott Wave framework offer a strategic opportunity to foresee potential trends—whether they signify a resumption or reversal of the existing trend. Elliott Wave Analysis is a tool to decipher market cycles, offering insights into the psychological dynamics of buyers and sellers. Corrective waves provide an opportunity to anticipate trend resumption or reversal. The principle of non-overlapping waves helps identify the structure of the market move. Validation and Risk Management: The integrity of this Elliott Wave structure is contingent on Wave II not surpassing the low of Wave I, identified at $1.440. A breach of this level would invalidate the current wave count. I am not Sebi registered analyst. My studies are for educational purpose only. Please Consult your financial advisor before trading or investing. I am not responsible for any kinds of your profits and your losses. Most investors treat trading as a hobby because they have a full-time job doing something else. However, If you treat trading like a business, it will pay you like a business. If you treat like a hobby, hobbies don't pay, they cost you...! Hope this post is helpful to community Thanks RK💕 Disclaimer and Risk Warning. The analysis and discussion provided on in.tradingview.com is intended for educational purposes only and should not be relied upon for trading decisions. RK_Charts is not an investment adviser and the information provided here should not be taken as professional investment advice. Before buying or selling any investments, securities, or precious metals, it is recommended that you conduct your own due diligence. RK_Charts does not share in your profits and will not take responsibility for any losses you may incur. So Please Consult your financial advisor before trading or investing.
NYMEX:NG1!Education
by RK_Chaarts
20
Ichimoku Wave Theory's | Time CycleA set of equations AB=C A=C C=B(AB) A=B+C can be used to create waves that can be applied to every high and low or trend cycle. Combining these waves with Japanese Patterns can help to create more accurate TP and exit points. Some tips for better results include using the nearest Japanese/Japsian number if the numbers are shy of the main Japanese Number. For instance, instead of using A=60, use A=63. Similarly, use AB=99 instead of AB=97. Below are some Japsian Key Numbers that can be used to enter new cycles and create better results: - First Cycle: 9, 17, 26 - Second Cycle: 35, 44, 52, 63, 72, 77 - Entering New Cycle: 90, 99, 108, 129, 153, 216
Education
by Japsianv2
22
Mastering Elliott Wave Theory with Renko ChartsElliott Wave Theory is a popular technical analysis tool used by traders to predict market patterns and trends. Developed by Ralph Nelson Elliott in the 1930s, this method is based on the idea that financial markets move in repetitive cycles or waves. In this comprehensive guide, we will discuss the fundamentals of Elliott Wave Theory and explore how Renko charts can be used as a supplemental tool to enhance your analysis. By combining these two techniques, you can gain a deeper understanding of market movements and improve your trading strategies. I. Understanding Elliott Wave Theory Basic Principles of Elliott Wave Theory Elliott Wave Theory is built on the premise that markets exhibit specific patterns, known as waves, that reflect investor psychology. These patterns can be broken down into two types: 1. Impulsive waves: These waves move in the direction of the larger trend and consist of five smaller sub-waves. These waves are marked in green below and are numbered 1,2,3,4, and 5. 2. Corrective waves: These waves move against the primary trend and consist of three smaller sub-waves. These waves are marked in red below and are numbered A, B, and C. The 5-3 Wave Pattern The complete Elliott Wave cycle consists of eight waves, with the first five forming an impulsive pattern and the last three forming a corrective pattern. This 5-3 wave pattern repeats itself, creating fractal patterns in the market. Below we have taken the main Elliot wave listed above and broken it down into the first subset. The impulse waves are labeled i, ii, iii, iv, and v and the corrective waves a, b, and c. Applying Elliott Wave Theory to Trading To utilize Elliott Wave Theory in your trading, start by identifying the primary trend and its wave count. Analyze the price action to determine if the market is in an impulsive or corrective phase. By understanding the current wave pattern, you can predict probable future movements and make informed trading decisions. II. Renko Charts: A Supplemental Tool for Elliott Wave Analysis What are Renko Charts? Renko charts are a unique type of price chart that only consider price movement and disregard time. Each block, or "brick," on a Renko chart represents a fixed price increment. When the price moves by the predetermined amount, a new brick is added to the chart at a 45 degree angle from the previous. This results in a clean, easily readable chart that highlights significant price trends. Benefits of using Renko charts By eliminating the noise of insignificant price fluctuations, Renko charts can help traders: -Identify trends more easily -Spot support and resistance levels -Recognize chart patterns and potential reversal points -Filter out false breakouts and whipsaws How to incorporate Renko charts into Elliott Wave analysis Renko charts can be a valuable addition to your Elliott Wave analysis by helping you confirm wave counts and identify high-probability trading setups. Here's how you can incorporate Renko charts into your analysis: 1. Confirming wave counts: Use Renko charts to validate your wave count by comparing the impulsive and corrective waves on both the traditional and Renko charts. If the wave count is consistent across both chart types, it increases the likelihood of a correct analysis. 2. Identifying high-probability trading setups: Renko charts can help you spot high-probability setups by highlighting significant price trends and potential reversal points. Combining this information with your Elliott Wave analysis can increase the accuracy of your trades. Indicators such as oscillators and moving averages can be useful to help identify these set-ups. Renko charts should not be used solely to make decisions as they are a synthetic chart but are a highly useful tool for identifying the underlying trends. 3. Managing risk: Utilize Renko charts to set stop-loss and take-profit levels based on support and resistance levels. This can help you manage risk effectively and protect your trading capital. Conclusion Elliott Wave Theory and Renko charts, when used together, can provide a powerful framework for analyzing market patterns and making informed trading decisions. By understanding the basic principles of Elliott Wave Theory and incorporating Renko charts as a supplemental tool, you can enhance your technical analysis skills and increase your trading success. As with any trading strategy, remember to practice and refine your techniques before applying them to live markets.
Education
by LeafAlgo
2
Knowing if a trend is still valid or is beginning to failin the above image you can see, that when all moving averages do not cross or overlap one another, this indicates a strong trend/price sentiment in this direction, even after a major pullback, you'll notice the moving averages still dont cross or overlap. also on the chart image ive touched upon the very popular 1, 2, 3 trading pattern and highlighted that there's a not so obvious 4 reset wave before the 1, 2, 3 pattern starts again, the trick is check to see if the phase 4 wave causes any of the moving averages to cross/overlap before setting up your 1, 2, 3 move! because if they have crossed or one of them is overlapping the other, this signals the trend is weakening and the market may be looking at beginning a range or and new trend in the opposite direction.
Education
by algoquantix
Chart Patterns - Bear Market Scenario Hi there, i have been sharing the chart patterns which are seen on any type of price charts. (CANDLESTICK CHART) and after research and experience, i see that the price move via various ways or concepts. as per my experience, i see that the price move via waves & correction, and react to supply and demand levels. please share it and one may need it. and this is seen any type of instruments like stocks, forex, commodities, Futures & options. crypto. etc. in time frame for BEAR MARKETS ONLY. Note: Its my view only and its for educational purpose only. Only who has got knowledge about this strategy, will understand what to be done on this setup. its purely based on my technical analysis only (strategies). we don't focus on the short term moves, we look for only for Bullish or Bearish Impulsive moves on the setups after a good price action is formed as per the strategy. we never get into corrective moves. because it will test our patience and also it will be a bullish or a bearish trap. and try trade the big moves. we do not get into bullish or bearish traps. We anticipate and get into only big bullish or bearish moves (Impulsive Moves). Just ride the Bullish or Bearish Impulsive Move. Learn & Know the Complete Market Cycle. Buy Low and Sell High Concept. Buy at Cheaper Price and Sell at Expensive Price. Keep it simple, keep it Unique. please keep your comments useful & respectful. Thanks for your support.... Tradelikemee Academy
NSE:PATANJALIEducation
by Tradelikemee
Classical Chart Patterns - Bull MarketsHi there, i have been sharing the chart patterns which are seen on any type of price charts. (CANDLESTICK CHART) and after research and experience, i see that the price move via various ways or concepts. as per my experience, i see that the price move via waves & correction, and react to supply and demand levels. please share it and one may need it. and this is seen any type of instruments like stocks, forex, commodities, Futures & options. crypto. etc. in time frame for BULL MARKETS ONLY. Note: Its my view only and its for educational purpose only. Only who has got knowledge about this strategy, will understand what to be done on this setup. its purely based on my technical analysis only (strategies). we don't focus on the short term moves, we look for only for Bullish or Bearish Impulsive moves on the setups after a good price action is formed as per the strategy. we never get into corrective moves. because it will test our patience and also it will be a bullish or a bearish trap. and try trade the big moves. we do not get into bullish or bearish traps. We anticipate and get into only big bullish or bearish moves (Impulsive Moves). Just ride the Bullish or Bearish Impulsive Move. Learn & Know the Complete Market Cycle. Buy Low and Sell High Concept. Buy at Cheaper Price and Sell at Expensive Price. Keep it simple, keep it Unique. please keep your comments useful & respectful. Thanks for your support.... Tradelikemee Academy
NSE:PATANJALIEducation
by Tradelikemee
The Characteristics of Corrective StructuresHi fellow traders, I would like to share with you all the characteristics of the most important structures when it comes to trading waves. When reading all the rules and guidelines of the Elliott Wave Principle it might be a little overwhelming and complicated for most traders. At least to me it was when I just started learning. For that reason I've tried to put it more in perspective by drawing all the patterns and making it more visual for everyone to understand. The notes are all included on the chart and I hope it helps you during your trading sessions. If there are any questions please feel free to comment, ~ OGwavetrader Follow our Tradingview account for more technical analysis updates Like, share and comment your thoughts.
Education
by OGwavetrader
9
Elliott Waves - How to Identify Ending Diagonal?Why is it critical to be able to identify Ending Diagonal waves - because normally their completion is followed by the reversal of trend and in some cases with explosive price movements. Above are the general rules for all the internal waves and for different variations of the pattern - Expanding and Contracting Ending Diagonals. Why is Ending Diagonal forming instead of Impulse When in wave 5 - usually it occurs at the end of a growth cycle like we are observing now when the risks of investment (in case of equities) are increasing, and energy of bulls is slowly getting overwhelmed by the strength of bears, and a rapid reversal happens with some trigger point - Covid in 2020 When in wave C of zig-zag - similar but in reverse, the energy of bears is weakening when forming a correction and bulls are taking over and a new growth cycle begins It is important to note though that with great potential gains for investors, Ending Diagonal can be confused in some cases with complex corrections so traders need to be careful and considering only those cases where there is a very clear structure of waves. Here are few examples from the real equities to see the different types of this extremely important wave structure. Booking Holdings - an Expanding Ending Diagonal has been forming since the crash of the great financial crisis and with the current poor fundamentals the upcoming correction may be very deep Tesla - just recently a lengthy Running Flat correction has completed with an Ending Diagonal in wave C (although it is still risky to assume this scenario given fundamental risks) Amazon - the historic high in July 2021 was completed by an Ending Diagonal and notice how deeply it has corrected since then And here are few examples where an Ending Diagonal is potentially developing: Berkshire Hathaway - waves 1 to 4 have been formed and we are awaiting the final zig-zag of wave 5 AMD - after forming historic high the price has been correcting with ABC pattern and potential Ending Diagonal in wave C HP - waves 1 to 4 of a global impulse have been formed and it is noticeable how choppy is the movement in the final wave 5 which is likely to be an Ending Diagonal MA - similar situation as in HP Thank you for reading my post. Also let me know if you would like to see other stocks, indices, Forex or Crypto analysed using Elliott Waves.
Education
by vitalalyt
💨𝙀𝙒 𝙋𝙖𝙩𝙩𝙚𝙧𝙣: 𝙎𝙞𝙣𝙜𝙡𝙚 𝙕𝙞𝙜𝙯𝙖𝙜🌊●●● 𝙎𝙞𝙣𝙜𝙡𝙚 𝙕𝙞𝙜𝙯𝙖𝙜 (SZ or ZZ) ❗❗ 𝙍𝙪𝙡𝙚𝙨 ● A zigzag always subdivides into three waves. ● Wave A always subdivides into an impulse or leading diagonal . ● Wave C always subdivides into an impulse or ending diagonal . ● Wave B always subdivides into a zigzag, flat , triangle or combination thereof . ● Wave B never moves beyond the start of wave A . ● Wave B always ends within the price territory of wave A . ● Wave C almost always ends beyond the end of wave A . (failure to comply with this requirement is called «truncation» * * Guideline, but should be followed as a rule ❗ 𝙂𝙪𝙞𝙙𝙚𝙡𝙞𝙣𝙚𝙨 ● Wave C should not fail to reach the end of wave A by more than 10% of the length of wave A . ● In a zigzag, the length of wave C is usually equal to that of wave A , although it is not uncommonly 1.618 or .618 times the length of wave A (rarely 2.618 ) ● Wave B typically retraces 38 to 79 percent of wave A . ● If wave B is a contracting triangle, it will typically retrace 38 to 50 percent of wave A . ● If wave B is a running contracting triangle , it will typically retrace between 10 and 40 percent of wave A . ● If wave B is a zigzag, it will typically retrace 50 to 79 percent of wave A . ● In a zigzag, if wave A is a leading diagonal , then we would not expect to see an ending diagonal for wave C . ● A line connecting the ends of waves A and C is often parallel to a line connecting the end of wave B and the start of wave A . (Forecasting guideline: Wave C often ends upon reaching a line drawn from the end of wave A that is parallel to a line connecting the start of wave A and the end of wave B .) Elliott Wave Principal 2005 and Q&A EWI.
BITSTAMP:BTCUSDEducation
by TradeWaves-EWA
4