How to Elliot Wave - Based on XAUUSD (Gold) - By RT_Trading_Hi Trader,
My name is Raffa and I am one of the two members of RT-Trading. We are a very passioned trading duo and our main goal is to change the trading market, at least when it comes to working with the future customer. Lately the reputation of trading coaches has suffered tremendously due to bad signal groups.
That is exactly what we want to change. We also provide signals in our group, but only when we are sure of our cause. Still, our primary goal is to teach future traders to make their own decisions based on their expertise. We want to bring this expertise closer to you step by step.
Today we want to start exactly with that.
My trading expertise is based on one of the oldest charting techniques that exists alongside the Dow theory - The Elliot Wave Theory. The Elliot Wave Theory was founded by R. N. Elliot in 1934 and today represents one of the most important milestones in chart analysis.
Elliot found that the markets move in repetitive patterns that are characterized by waves. These waves happen everywhere. Be it in the commodity, stocks or forex market - they are ubiquitous.
This tutorial is intended to bring you closer to the Elliot Wave theory using the current Gold ( XAUUSD ) chart, so that you can successfully incorporate it into your trading. If you have any questions in this regard (since not all rules can logically be covered by a chart), don't be afraid to write us a private message.
So, let's get started.
First of all, I would like to clarify why I use the gold chart to bring you closer to the Elliot Wave theory. R. N. Elliot has done most of his research on the Dow Jones Index and the Gold Chart. So the Elliot Wave Theory, at least in my experience, is optimal to apply to these charts. But it also works with Bitcoin , for example.
The EW theory is a theory that is applied to the trend of the market. A distinction is made between bull and bear markets. It works identically in both cases, except that the chart is inverted.
A distinction is made between motif and correction waves. Motive waves consist of a total of 5 waves, which differ in waves 1-5. Correctional waves are waves that occur after the success of the 5 previous motive waves. For the waves 1-5 a distinction is again made between wave 1, 3, 5 and wave 2 and 4. As you can see in the chart, waves 2 and 4 are corrective waves of motive waves 1, 3 and 5. The Fibonacci number sequence plays here an extremely important role. Fibonacci retracements and Fibonacci extensions are essential when it comes to calculating the exact impact of individual waves. Therefore, I ask you to deal with it on our YouTube channel.
As you can see, each impulsive wave consists of 5 more inner waves - also a rule by Elliot to help you explain your count as correct. Wave 2, on the other hand, consists of the correctional waves A, B and C, which in most cases form a zigzag and require a retracement of at least 50% of wave 1.
Let's continue with wave 3. The basic rule is that wave 3 must never be the shortest wave - NEVER! This rule is essential to properly applying this theory, so burn it into your mind.
Wave 4, on the other hand, normally retraces 38% of wave 3, but never more than 50% and it must not touch wave 1 - except in a diagonal. We'll talk about the special diagonal shape in a moment. What also often happens when it comes to wave 4 is that it usually forms a triangle that consists of a total of 5 inner waves. They are identified as waves ABCDE.
Now we come to the last wave of the bull market - wave 5. It can often be the longest in commodities , which means that a long entry at the bottom of wave 4 at around 38% is the most money-making swing trade. Now we have a special case of wave 5. Wave 5 has formed a diagonal that allows wave 4 to touch the top of wave 1. Furthermore, a diagonal is characterized in that wave 1 is the longest and each subsequent wave is shorter than the last. So here too, wave 1 is the longest, but 3 is never the shortest. If you had recognized this diagonal early enough, you would have been able to place the first short entries and have achieved an enormous swing trade with regard to the correctional waves ABC .
Now we come to the end. Corrective waves ABC . The waves ABC can also consist of 5 inner waves, but this is not a must. They can also consist of waves ABC or, as here, the special case WXY, which was formed in wave B. Wave WXY is nothing more than a double zag. As you can see, every single wave (i.e. W, X and Y) consists of another zigzag . That was it.
What is really interesting for us in this case is the landing of wave A and wave C. The following applies: Always pay attention to the inner wave formation of the individual waves. In this way you can see when a wave has reached its end or whether another wave is missing. Typically, wave A retraced between 38% and 50% of the total movement of waves 1-5. Wave B, on the other hand, retraces at least 50% of wave A and wave C assumes the extension of wave A. We measure the low point of wave A and pull the Fibonacci extension to the high point of wave B and thus get the end point of wave C. The end point of wave C can be either the 62%, 100% or 162% extension of wave A. . On this chart, wave C has bottomed at 162% percent. At this point, for example, we went long and gave our members this signal - which I find extremely successful
That was it. That's the Elliot Wave Theory. We went through a complete cycle of wave 1-C and now expect a new bullish cycle that starts again with wave 1. Here you have the chance to apply your knowledge to the gold market and see whether the market is formed on this knowledge.
I can say from my experience that the Elliot Wave Theory has changed my view of the market tremendously and has allowed me to become a successful trader. For me it is clearly the key to success.
Dear trader, if you enjoyed the tutorial, I would be happy if you liked your site. You would support us enormously with it.
RL from RT-Trading
