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5 TYPES OF ELLIOTT WAVE PATTERNS Hello traders, today we will talk about 5 TYPES OF ELLIOTT WAVE PATTERNS ( FIRST SOME BASIC INFO ) What is Elliott Wave Theory? The Elliott Wave Theory suggests that stock prices move continuously up and down in the same pattern known as waves that are formed by the traders’ psychology. The theory holds as these are recurring patterns, the movements of the stock prices can be easily predicted. Investors can get an insight into ongoing trend dynamics when observing these waves and also helps in deeply analyzing the price movements. But traders should take note that the interpretation of the Elliot wave is subjective as investors interpret it in different ways. (KEY TAKEAWAYS) The Elliott Wave theory is a form of technical analysis that looks for recurrent long-term price patterns related to persistent changes in investor sentiment and psychology. The theory identifies impulse waves that set up a pattern and corrective waves that oppose the larger trend. Each set of waves is nested within a larger set of waves that adhere to the same impulse or corrective pattern, which is described as a fractal approach to investing. Before discussing the patterns, let us discuss Motives and Corrective Waves: What are Motives and Corrective Waves? The Elliott Wave can be categorized into Motives and Corrective Waves: 1. Motive Waves: Motive waves move in the direction of the main trend and consist of 5 waves that are labelled as Wave 1, Wave 2, Wave 3, Wave 4 and Wave 5. Wave 1, 2 and 3 move in the direction of the main direction whereas Wave 2 and 4 move in the opposite direction. There are usually two types of Motive Waves- Impulse and Diagonal Waves. 2. Corrective Waves: Waves that counter the main trend are known as the corrective waves. Corrective waves are more complex and time-consuming than motive waves. Correction patterns are made up of three waves and are labelled as A, B and C. The three main types of corrective waves are Zig-Zag, Diagonal and Triangle Waves. Now let us come to Elliott Wave Patterns: In the chart I have mentioned 5 main types of Elliott Wave Patterns: 1. Impulse: 2. Diagonal: 3. Zig-Zag: 4. Flat: 5. Triangle: 1. Impulse: Impulse is the most common motive wave and also easiest to spot in a market. Like all motive waves, the impulse wave has five sub-waves: three motive waves and two corrective waves which are labelled as a 5-3-5-3-5 structure. However, the formation of the wave is based on a set of rules. If any of these rules are violated, then the impulse wave is not formed and we have to re-label the suspected impulse wave. The three rules for impulse wave formation are: Wave 2 cannot retrace more than 100% of Wave 1. Wave 3 can never be the shortest of waves 1, 3, and 5. Wave 4 can never overlap Wave 1. The main goal of a motive wave is to move the market and impulse waves are the best at accomplishing this. 2. Diagonal: Another type of motive wave is the diagonal wave which, like all motive waves, consists of five sub-waves and moves in the direction of the trend. The diagonal looks like a wedge that may be either expanding or contracting. Also, the sub-waves of the diagonal may not have a count of five, depending on what type of diagonal is being observed. Like other motive waves, each sub-wave of the diagonal wave does not fully retrace the previous sub-wave. Also, sub-wave 3 of the diagonal is not the shortest wave. Diagonals can be further divided into the ending and leading diagonals. The ending diagonal usually occurs in Wave 5 of an impulse wave or the last wave of corrective waves whereas the leading diagonal is found in either the Wave 1 of an impulse wave or the Wave A position of a zigzag correction. 3. Zig-Zag: The Zig-Zag is a corrective wave that is made up of 3 waves labelled as A, B and C that move strongly up or down. The A and C waves are motive waves whereas the B wave is corrective (often with 3 sub-waves). Zigzag patterns are sharp declines in a bull rally or advances in a bear rally that substantially correct the price level of the previous Impulse patterns. Zigzags may also be formed in a combination which is known as the double or triple zigzag, where two or three zigzags are connected by another corrective wave between them.‘ 4. Flat: The flat is another three-wave correction in which the sub-waves are formed in a 3-3-5 structure which is labelled as an A-B-C structure. In the flat structure, both Waves A and B are corrective and Wave C is motive having 5 sub-waves. This pattern is known as the flat as it moves sideways. Generally, within an impulse wave, the fourth wave has a flat whereas the second wave rarely does. On the technical charts, most flats usually don’t look clear as there are variations on this structure. A flat may have wave B terminate beyond the beginning of the A wave and the C wave may terminate beyond the start of the B wave. This type of flat is known as the expanded flat. The expanded flat is more common in markets as compared to the normal flats as discussed above. 5. Triangle: The triangle is a pattern consisting of five sub-waves in the form of a 3-3-3-3-3 structure, that is labelled as A-B-C-D-E. This corrective pattern shows a balance of forces and it travels sideways. The triangle can either be expanding, in which each of the following sub-waves gets bigger or contracting, that is in the form of a wedge. The triangles can also be categorized as symmetrical, descending or ascending, based on whether they are pointing sideways, up with a flat top or down with a flat bottom. The sub-waves can be formed in complex combinations. It may theoretically look easy for spotting a triangle, it may take a little practice for identifying them in the market. Bottomline: As we have discussed above Elliott wave theory is open to interpretations in different ways by different traders, so are their patterns. Thus, traders should ensure that when they identify the patterns. This chart is just for information Never stop learning I would also love to know your charts and views in the comment section. Thank you
Education
by CRYPTOMOJO_TA
8
Bull Trend Alert* Crossing a key level on the weekly RSI during a bear market has always, in the past, indicated the onset of a new bull trend * Whenever in the past, BTC crosses the 21-week EMA (after staying below for a few months), it has had a bullish continuation * We might experience some corrections, so it's advised to buy on every dip over the next two months * Historically, the market has never been in the red over a six-month period *There is a small exception in the orange box in 2015, where there was another touch of the bottom before it skyrocketed from there. Simplicity yields clarity.
INDEX:BTCUSDLong
by deepUP
LAST CONSOLIDATION BEFORE NEXT BULL RUNMy Idea of consolidation towards next bull run. Best time to Buy and HODL. ETH and BTC showing tendency of having a pullback soon before finally moving down towards the last consolidation area. Expecting to see strong bullish formation after taking out previous HTF Low towards the GAP on 3D TF We could already be at the start of the next bull run very very soon. Probably between March to June of 2023. :) Time to study the best crypto projects out there. I think the timing is just perfect, as most of the influencers out there area calling for the next bull run to be in 2024. Momentarily my bias is a short swing upwards as a retracement of 50% to 61.8% taking out some of the gaps left recently before the continuation towards the last consolidation area.
Short
by bl4ckoffee
Bitcoin: Momentum Looks Toward Liquidity Near $27K-$29KWith a 70% drop in value over the past 8-10 months, its easy to understand why many traders consider price levels of $3K, $10K, $14K, $16K and even $0.00 as appropriate at this time. Relying solely on Bictoin's price structure, even to consider the waves from its all-time low, I find all of the above mentioned targets as doubtful in the least (though I have been wrong before). As my prediction was made weeks ago, I yet expected Bitcoin to find very solid support above the $18.6K level and am hesitant to consider other macro, bearish alternatives without this being negated. Still sitting nicely within its apparent Leading Diagonal pattern, wedge Wave 4 should conclude very soon, likely within the next 48 hours. Also considering the guidelines of a Diagonal Wave, which many also classify as Wyckoff, the next upside swing should be at least $6503 in length, pointing us minimally to low $26K. Looking at the current upside trend line, one could also see why $29K would be attainable. The distant ranges of traders' emotion are currently on full display. At $17K most people thought gloom, I was too undecided a bit here but shortly after the pump initiated and I found some invalidations for more downside, my sentiment has since been bullish. At $25K, certain bulls proclaimed that price was heading back into the $30Ks and beyond. The Digital Surf Trading Community was in total expectation of a drop to the $20K range. Now that we're below $20K, the sentiment of gloom and fear has yet returned. With the theory of Support and Resistance, traders feel that a drop below $20K is a very very big deal. TradingView and mainstream news articles only help to cement this bias. In the grand scheme of price action however, $20,000 is simply just another number, though definitely a psychological level when looking at the bare naked number. Should the target range of $27K-$29K be actualized, fully expect a retest near $21.5K, though there is slim chance that support could be discovered above this level. Based on Fib levels and my personal wavemapping, $18.6K is the only major level in the current range. If Bears can't strike below it, Bulls are largely yet in control. As said weeks ago, Crypto Winter has concluded and Crypto Spring is upon us (unless $18.6K breaks).
BITFINEX:BTCUSDLong
by DigitalSurfTrading
44