How to Count Waves Using Chart Patterns?We can count waves using traditional patterns like Head and shoulders, Double Top and Bottom,
Triangle, cup & handle, etc. This article is about how you can count waves by identifying chart patterns.
I have covered Three chart patterns in this article,
1) Triangles
2) Head and shoulders
3) Double Top and Bottom
1) Head and shoulders:
In addition, the two lows formed when the price failed to rise and fell back down were basically at the same level. The horizontal line is often referred to as the "neckline" When the price fails to fall back for the third time neckline will break. So "head and shoulders" was officially established.
Changes in volume with head and shoulders:
During the formation of "head and shoulders", the left shoulder has the largest volume, the Head has a slightly smaller volume, and the right shoulder has the smallest volume. The phenomenon of diminishing trading volume shows that when the stock price rises, the chasing force is getting weaker and weaker, and the price has the meaning of rising to the end.
Operation plan after the Head and shoulders appear:
When the head and shoulders formed, you can decisively follow up the short order. The formation of the head and shoulders indicates the beginning of a new round of decline in the market, and the minimum drop is the distance from the head to the neckline. The profit is very substantial. Therefore, studying the formation of the Head and Shoulders is also a necessary analysis process for band enthusiasts.
Wave Count:
The left shoulder: wave 3/A.
The first touch on the neckline: wave 4/B
Head: wave 5/C
The second touch on the neckline: wave A/1
The right shoulder: wave B/2
The ending point of the right shoulder: wave C/3
2) Triangles:
These are the most commonly used triangle patterns. In this motion, we are going to understand the triangle in terms of the Elliot wave. We'll be talking about the classical triangle pattern in an upcoming educational series.
Wave Count:
A triangle forms in corrective waves. There are Four corrective waves in Elliott wave theory. The corrective waves are 2,4, B, and X.
There are four waves in a triangle which are A, B, C, D, E.
The starting point of wave A of the triangle is the ending point of impulsive wave 1/3/A/W. After the completion of wave E of wave 1/3/A/W, the Impulsive wave will initiate.
3) Double Tops and Bottom:
In the chart, you can sometimes see the stock price fluctuations. The stock price fell back after reaching the highest price. After some sorting, it rose again to near the previous stock price level and then fell back. Two "normally highs" The high point is formed on the circuit diagram and will not be seen again in the short term.
Wave Count:
In a Bull market, The first Top of the pattern represents the completion of the impulsive wave. The ending point of the Impulsive wave is the starting point of the corrective wave.
I started the wave count from the first Top and labeled it as A, B, and C waves.
In a Bear Market, The first Bottom of the pattern represents the completion of the impulsive wave. The ending point of the Impulsive wave is the starting point of the corrective wave.
I started the wave count from the first Bottom and labeled it as A, B, and C waves. After wave C is complete, we can ride the impulsive waves.
Elliottwavecorrection
ADAUSD | Wave projection | Double combination - Bulltrap D-waveA potential double combination scenario with double zz - X - triangle ABCDE with a false head & shoulders breakout D wave - could retraced as high as 0.786 fibonanci of previous wave and possible E-wave coming for liquidity zone.
A safer long entry @ wave D breakout after liquidity targeting at the next liquidity zone +110%.
Good Luck
Render's Rally ending? Trading Insights & Retrace AspectsThe rally in Render appears to be reaching its conclusion. Over the past few months, Render has been an intriguing trading token, outperforming BTC by surging from 0.9 to its monthly resistance level of 2.93 (Bybit).
Based on my wave count analysis, it seems that we are approaching the end of the rally at this resistance point. I observe a potential ending diagonal pattern, consisting of a fifth wave within a fifth wave within a fifth wave, characterized by declining volume. A final upward push towards the monthly resistance, accompanied by RSI divergence, could serve as a short trigger. Alternatively, a more cautious approach would be to wait for the breach of the extreme point of wave 3 within the ending diagonal.
If a retracement occurs, the target could be a return to the previous fourth wave of a lower degree. This area coincides with a monthly resistance level, Fibonacci 0.618 retracement level, and the fixed range point of control for wave 4 according to my highest count degree.
In conclusion, the success of this swing trade will depend on the extent of the upward movement before encountering divergences or a reversal. If realized, this trade has the potential for a risk-to-reward ratio of approximately 3.85.
I will closely monitor Render for further signs of weakness, which could present a short-selling opportunity, or to observe if it breaks through the monthly support level accompanied by notable volume
SMR, an algorithmic correctionSMR has been in a steady and predictable decline for about 9 months now. We recently just observed another rejection from the top of the descending macro wedge trend line, and there is currently a fight around the $7.70 to $8.00 range. A strong break below the $7.60 level may have enough momentum to push the price to a new low and I will look for support at the psychological support level of around $7.00.
I am using Elliot Correction waves here to illustrate the correctional structure playing out, and local highs and lows have been reliably trading within the larger descending wedge formation. I believe an upside break of the wedge will occur at some point, but for the time being the downtrend is still intact.
BTCUSD | 1st ABC Correction A-wave Target ProjectionA potential bullish scenario : 1st ABC correction zigzag pattern with upcoming wave 5 of c-leg targeting 0.382 retracement of previous 5X motive wave move between 24-25K
However, wave 1 and 3 in c-leg are extended, wave 5 can be the shortest wave and truncation is still possible.
Action: A safer long entry can be placed when breakout downtrend line 2-4 or above wave 4 of c -leg, targeting the upper resistance of the bull flag.
Always trade with affordable risk and respect your stoploss!
WBD | Wave Analysis | Downtrend breakout | Inv. Head & ShouldersWBD : Wave projection - weekly price action and chart pattern analysis
> The downtrend channel 5 motive wave breakout with a possible valid inverted head * shoulders pattern formation
> A potential ABC correction uptrend pattern - a typical wave b bull flag pattern for right shoulder pattern targeting at 0.618 - 0.786 fibonacci retracement of wave a.
> If successfully breakout neckline - TP wave c at 1.618 extension of wave a near MA200w zone +100%
> SL @ IHS position -20% downside
> Indicator : RSI week bullish divergence
Always trade with affordable risk and respect your stoploss
Good Luck
BTCUSD | Wave Projection 123 | Classic Reversal Move CUP&HOLDERBTC classic reversal move > Inverted head & shoulders turning into cup&holders
Target cup&holder at the same level of previous mega falling wedge
Possible a bull flag move forming holder pattern at 0.5 fibo retracement zone
SHORT ENTRY NOW! and Long at bull flag confirmation pattern breakout TP +70%
BEM | Leading Diagonal Pattern Projection - Wave B CorrectionA possible ABC correction after finishing mega leading diagonal wave pattern:
Wave B target 0.5 - 0.618 retracement of wave A and EMA 20 week resistance
A possible false breakout EMA200 week
Wave C - Targeting 0.786 fibonanci zone of major Wave 1
Bearish view on the GBPAUD below 1.8500It looks like the GBPAUD ended a five-wave rally yesterday at 1.8493, which should be followed by at least a three wave correction that could take prices to 1.8193 and 1.8000. In addition to the wave-count, there is a clear negative divergence between prices and RSI that confirm our view. A break above 1.8500 will negate this count.
9988 | Alibaba - Wave Analysis | Inverted H&S TFW Target +100%Wave analysis and chart pattern projection:
> A possible valid inversed head & shoulders pattern in weekly timeframe, potentially 2-wave correction and rebound to retest the neckline resistance for a strong breakout.
> TP Inverted H&S @ 1.618 and 2.0 fibonacci +100+%
> MACD doubled bullish divergence signal golden cross above baseline indicating bullish move.
BTCUSDT | TFW Wave Analysis | Inverted H&S Retesting Neckline?The current uptrend wave is potentially a leading diagonal with a valid inverted head & shoulders reversal pattern breakout - now with a DOJI candlestick this week, the price could retrace to the neckline level 25k, watchout for a false breakout then most likely to breakdown - SHORT ENTRY to the neckline level and EMA200 week -20+% downside
(A valid inverted H&S consists of a strong downtrend with at least twice length of the head & shoulders pattern and massive volume breakout)
EURUSD ForecsatEURUSD Forecast
The correction EURUSD started in September 2022 is not over yet. We are forecasting that we only have finished the (A) from the (A)(B)(C) of the correction in the intermediate degree (blue) to end wave 4 (green). Therefore we still need to see the price making higher highs from the current position.
We are forecasting this option as the most provable at this point because wave (A) seems like a clear motive wave for us. We clearly see 5 waves forming (A). That means that, as wave 4 in green (primary degree) has to have a corrective structure, there is still another wave up missing.
What to do?
We currently can not look to enter the market. We should be patient and wait for the price to break the 1.1033 level before looking for short-term buying opportunities.
Alternative scenario
We forecast that wave 4 in the primary degree (green) is not over yet. However, until the price does not break the 1.1033 level, we cannot discard the scenario where wave 4 is already over. If this is the case, the price will resume the downtrend directly, making lower lows.
Unfortunately, today we cannot give you a trade idea for the EURUSD, but we hope you understand what the asset situation of the EURUSD is.
As always, we will keep you updated
Please remember to do not to risk more than 2% of your account on each trading idea
BTCUSD EWP Wave IV & V Multiple Buy and Sell Targets 19k-23kThe Wave III target was reached and exceeded for BITSTAMP:BTCUSD from my previous idea included in link.
Now expecting Wave IV between ~21,350 to ~20k based on Wave IV being approx. half of Wave II and Wave V from ~20k targetting anywhere from ~22,500 to ~23,350.
Buy levels for Wave IV are ~19,950 and ~19,100 with S/L just below 18,400 . These positions will have conservative close targets at ~22,500 . These positions may go to ~23,300 but are unlikely to exceed 23,600 based on supply zones from sell offs in early November and mid August.
Opportunity to reverse positions into a sell at these levels with high R/R. Sell positions start at ~22,600 to ~23,300 with S/L above ~23,600 with T/P at ~20,000, ~19,100 with the potential to go far lower to ~17,700 or even ~16,500.
TIPH | Elliott Wave - Wave 4 Uptrend Target or A Bull Trap? Price action and chart pattern trading - A possible bull trap false breakout SMA200D
> The price strong breakout last week could be forming an inverse head & shoulders pattern for a possible 4-wave correction uptrend
> Wait for a pullback to complete the right shoulder consolidation pattern.
> Entry : breakout - right shoulder after pullback consolidation
> Target: Upper resistance +10-15% (0.382 - 0.5 Fibonacci retracement zone)
> Stop: right shoulder support - 4%
> Risk Reward Ratio: 2:1
Always trade with affordable risk and respect your stoploss
Good Luck