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The ultimate guide on Elliott waves in crypto tradingMost of you have probably heard about Elliott waves and we are sure that you don’t use it in cryptocurrency trading strategy because it’s very complicated and subjective approach. Crypto trading for beginners is very challenging and stressful even without Elliott waves. To be honest when we first time tried to implement it to my crypto trading strategies it was a complete disappointment. We were sure that it does not suit for both trading bot and manual trades. Elliott waves were thrown into a garbage bin for almost two years and we developed our crypto trading algorithm using only linear programming approaches. While we have been trying to invent the best automated trading bot using only indicators and support and resistance levels, best crypto traders have been successfully using Elliott waves in their analysis. Finally we make a decision to have a deep dive in this popular crypto trading tool and studied in details all available literature. As a result we found that Elliott waves will ruin your trading if you use it without special indicators for confirmation. Now we have 2 years of experience in trading with waves and almost one year ago we implemented them into our algorithmic trading bot. Today we prepared the best ultimate guide ever on Elliott waves using best practices and our unique experience how to use them in developing your own profitable crypto trading strategies. Let’s go! Why it’s vital to use Elliott waves? Before answer this question, let me ask another one! Why is important to use map to reach the final destination? I think here is the obvious answer! Talking about Elliott waves it’s almost the same reason. This is the only one approach which gives you a map for a price chart. I think you agree that technical indicators or support and resistance levels will not give you the answer which direction the price will choose. When you have, for example Stochastic Oscillator crossover or RSI oversold area hit you just open long because this is the most common strategy. You buy asset like a blind kitten. We are not criticize this approach, because using proper risk and money management you will earn with almost every strategy, but understanding the Elliott waves concept will dramatically increase your profit even if you combine them with your ordinary strategy. Why it’s happening? The answer is easy, because Elliott waves in the underlying structure of the market. You will be aware when you shall use your signals and when it’s better to skip trade. Now let’s dive into the Elliott waves to understand how to find them on the price chart. In the first part we will give you all needed theory and after that we will show in the real charts how it works. Elliott waves In general, Elliott waves concept is pretty easy. All markets are globally moving up with the five waves formations and then show the pullback with at the reactive waves. On the Bitcoin price chart above you can see the most common picture for Elliott waves. We had the bull run which consists of five waves and then was the bear market represented with the ABC correction. Waves can be divided into two groups: impulsive and reactive. On the bullish phase waves 1, 3 and 5 are impulsive, 2 and 4 reactive. Impulsive waves consists also with five sub waves, while reactive have usually three waves (exception the triangle correction, will be covered later). On the bearish phase we have the opposite situation: waves A and C are impulsive, while wave B is reactive. Now let’s discuss each wave in details. What will stop every wave in 90% of cases? Before we will observe the wave it’s very important to understand what are the early signs that current wave is about to be finished. This is really crucial concept because without it almost impossible to use Elliott waves for profitable trading. We need four tools to make sure that our counting is correct. In this article we will not spend to much time for these indicators, we just show you in practice how to use them. These tools are: Awesome Oscillator, Market Facilitation Index (MFI), Fibonacci retracement and extension and Fractals. These four indicators produce five wave’s end conditions. Divergence with Awesome Oscillator. If you found five sub waves inside any wave and you can see that price set the higher high (or lower low for bearish case), while AO set lower high (or higher low) it’s divergence between wave 3 and 5. This is the most powerful signal that trend is over. Fractal at the top or bottom. When you see the divergence it’s just the first sign of trend weakness, we need confirmation with the fractal forming at the top or bottom. You can easily find this indicator in TradingView, it will show you all fractals. MFI squat bar. We will cover MFI in one of the next educational articles, now you just need to know that it has squat state - the last battle between bulls and bears. One of the three top bars will be the squat in 80% of waves end. You can also find this indicator in TradingView. AO momentum change. Another one confirmation that trend is over is when AO histogram changes color. It’s better to wait three consecutive columns of the other color or when AO will cross back the signal line, 5 period MA of the AO. Target area. Using Fibonacci extension and retracement we can find the area where the reversal is the most likely. We will show you this targets when talking about waves. Now you know the five basic rules and we are ready to discuss every wave using this concept. Wave 1 When the previous trend is over the impulsive wave 1 begins. We can define the wave 1 start only establishing the previous wave end. It could be wave 5, C or E. It does not matter. You just need to apply our five rules: divergence, momentum change, target area, squat bar and fractal. On the chart you can see how in theory wave 1 can be looks like. Wave 1 always consists of five waves. That’s why we can wait for the same five rules to complete between wave 3 and 5 inside the wave 1. When you anticipate the wave 1 finish you have two options: close trade and re-enter at the wave 2 bottom or hold for the entire cycle. Wave 2 When wave 1 ends, you will see pull back in wave 2. It’s important to catch wave 2 bottom because wave 3 will bring you a lot of profit. Wave 2 can be classical ABC zigzag, flat or irregular correction. 70% probability it will be ended inside 0.38 and 0.62 Fibonacci retracement range of wave 1, in rare cases it can ends higher or lower. That’s why it’s better t count waves inside wave 2 and do not miss when all five trend killing conditions are met in wave C inside 2. Wave 3 The most impulsive wave in the entire cycle is obligatory for trading. Here you can have the less risky and the most easy trading. Wave 3 has the great fundamental factors as a price drivers. For example, Bitcoin spot ETF triggered a huge pump recently. Let’s imagine you correctly entered at the wave 2 end. Now we have to define wave 3 targets. The target area using fibonacci extension can be found between 1 and 1.61. This is the most likely case. In crypto it’s very often when waves 3 are extended. To have the most precise target it’s highly recommended to count waves inside wave 3. Found five waves? Check our favorite trend killing rules to exit a trade at the top. We know it sounds fantastic, but we managed to buy the exact bottom and sell at the top many times, but to be honest, we have never caught the top of the extended wave 3. Need more experience for that. Wave 4 Wave 4 can be the most complicated because it has a lot of different variants: zigzag, flat, irregular or even triangle. But at the same time in wave 4 we can have the easiest setup. When you predicted wave 3 top, it’s time to setup the target for the wave 4. The most reliable one is between 0.38 and 0.5. This wave is not so rapid as wave 2 and takes much more time (up to 70% of all cycle). The very important tip here is to look at the price where wave 4 inside wave 3 has been ended. If this level coincides with the 0.38-0.5 zone it can give you much more confidence. We have never made a mistake using this technique. As usual you have to look for the five trend killing rules in wave C inside wave 4 as well. Another one thing we want to point out. You know the axiom, that wave 4 has not overlap wave 1 top. This rule can be slightly violated and we will show you the case. Don’t pay attention that much to this rule. Wave 5 Finally we are in wave 5. This is really vital to define it’s top because bear market will follow this wave and can destroy your deposits. The target area for the wave 5 is defined as the distance between wave 1 bottom and wave 3 top, measured from wave 4 bottom. Area between 0.61 of this distance and 1 Fibonacci level is our target. There you have to find trend killing rules as usual but this time for all cycle, not subwaves. Corrections The most dangerous place for trading is the correction. From our experience only wave C in zigzag is tradable. You would better to skip corrections and try to catch it’s end. We have four types of corrections, but the most important knowledges is that wave C and E are always consists of five waves. It means you can use the rules how to catch wave 5 end inside these waves. Zigzag ABC. If wave A consists of 5 waves the most like we will see zigzag. Wait when wave B reach 0.5-0.61 Fibonacci of wave A and be ready to trade in wave C. Flat. Wave A has 5 waves inside. Waves A, B and C are almost equal to each other. Irregular. Wave B top is higher that the previous impulsive wave. Wave A consists of 3 waves. Triangle. Consists of A, B, C, D and E waves. Wave E consists of five waves. Usually occurs inside waves 4 and B of higher degree. Now you have a theoretical description. It’s time to trade!
Education
by Skyrexio
19
$BTC: Fib Interference PatternAdded 2 other fib ratios for extending awareness about the presence of extra golden proportions. Those are 0.146 and 0.887 2021 double tops define an important angle which is relevant to the chart in terms of its distinctive angle of the shift towards the side. Given angle we could define the width of fibonacci channel by applying the Nov 2022 bottom: Tops 2017 & 2021 applied to Coving bottom: Establishing fabric of PriceTime based on its historic incline. To increase further the awareness on waves of probability limits, the process can be repeated. Tops 2013 & 2017 applied to 2011 Low High angle fib channel related to timing: 2011 & 2013 Tops applied to August 2015 Low
INDEX:BTCUSD
by fract
4
Indicators for trading using Bill Williams' Profitunity strategyI published 3 indicators for trading using Bill Williams' Profitunity strategy. For each indicator, I have added a visual and detailed description in English and Russian. In this post I will briefly describe these indicators and how I use them together. AFDSA indicator (Alligator + Fractals + Divergent & Squat Bars + Signal Alerts) Includes Williams Alligator, Williams Fractals, Divergent Bars, Market Facilitation Index, Highest and Lowest Bars, maximum or minimum peak of the Awesome Oscillator, and signal alerts based on Bill Williams' Profitunity strategy: Bullish and Bearish Divergent Bar Signal + Squat Bar + Green Bar + Fake Bar + Awesome Oscillator Color Change + AO Divergence. Crossing the green line (Lips) of an open Alligator. Formation of a fractal. Signal about the breakdown of the last upper or lower fractal. Signal about the appearance of a new maximum or minimum peak of AO in the interval of 140 bars from the last bar. I also added an Alligator display for the higher timeframe, for example, if the chart timeframe is 1 hour, then the higher timeframe will automatically be 4 hours, if the chart timeframe is 4 hours, then the higher timeframe will be 1 day, etc. AOE Oscillator (Awesome Oscillator + Bars count lines + EMA Line) Includes the Awesome Oscillator with two vertical lines at a distance of 100 and 140 bars from the last bar to determine the third Elliott wave by the maximum peak of AO in the interval from 100 to 140 bars according to Bill Williams' Profitunity strategy. Additionally, a faster EMA line is displayed. I also added display of the AO line for the lower timeframe instead of the EMA line if the Moving Average Line values (method, length and source) are equal to the Awesome Oscillator values in the indicator settings. For example, if the chart timeframe is 1 day, then the lower timeframe will automatically be 4 hours, if the chart timeframe is 4 hours, then the lower timeframe will be 1 hour, etc. VBCHL indicator (Visible bars count on chart + highest/lowest bars, max/min AO) The indicator displays the number of visible bars on the screen, including the prices of the highest and lowest bars, the maximum or minimum value of the Awesome Oscillator. The values change dynamically when scrolling or changing the scale of the chart, but with a delay of several seconds, so this feature is included in a separate indicator so as not to slow down the work of other indicators. Indicator settings In the AFDSA indicator I use the following settings: By default, the Squat Bar is colored blue, and all other bars are colored to match the Awesome Oscillator color, except for the Fake bars, which are colored with a lighter AO color. But I also enable the display of "Green" Divergent bars in the "Green Bars > Show" field. I enable the display of Alligator for higher timeframes in the "Alligator for higher timeframe > Enable" field. In the indicator style settings, I disable the display of the highest and lowest bars, maximum and minimum AO peak labels, because these labels are also displayed by the VBCHL indicator depending on the number of visible bars in the chart window. Only after opening a position, I enable all additional alerts in the “Enable all additional alerts” field (after changing this field, you need to re-create the alert for the current chart): crossing the green line of an open Alligator, formation of a fractal, appearance of a new maximum or minimum AO peak. In the settings of the AOE oscillator, I enable the display of the AO line for the lower timeframe instead of the EMA line, setting the same values in the fields for the Moving Average Line (method, length and source) and Awesome Oscillator. In the VBCHL indicator settings, I only enable the simple display text style for labels in the "Simple display text style for labels" field. As a result, when analyzing the current chart, I immediately see all the signals on the chart, the location of the bars relative to the Alligator on the higher timeframe and changes in the Awesome Oscillator on the lower timeframe. And thanks to the VBCHL indicator, I quickly select the desired timeframe for analyzing the 5-wave Elliott impulse, focusing on the interval of 140 bars, and immediately see whether there is divergence between the maximum AO peak and the following lower AO peak in this interval.
OANDA:XAUUSDEducation
by grigorykov
2
AUD/USD aimed for 0.635 (3/26/2024)Hello Traders AUD/USD moving down in 5 Elliot wave impulse waves. After the first 5 wave impulse, AUD/USD made an ABC correction. Afterward, we faced a big drop in AUD/USD indicating that the price desires lower levels and has started another 5-wave impulse. So we believe every correction is a sell opportunity for this pair. Our technical view has been shown in the chart. If you like it then Support us by Like, Following, and Sharing. Thanks For Reading Team Fortuna -RC (Disclaimer: Published ideas and other Contents on this page are for educational purposes and do not include a financial recommendation. Trading is Risky, so before any action do your research.)
Short
by fortunamarkets
📍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
Bitcoin - Probabilistic MapSince traders are literally made of particles, it's vital to know the principles of their behavior in micro scale. Some people even use planetary cycles to implement into charting. But I believe the answer is deep in quantum world of probabilities - the fabric of reality itself. Reference to Quantum Mechanics The universe itself prohibits 100% prediction accuracy. This is called Heisenberg Uncertainty Principle, and it's the fundamental building blocks of Quantum Mechanics. In order to predict particles behavior, all you need are just 2 quantities/data/features: 1) Position of the particle 2) Momentum of the particles. If you know it's position and it's momentum, you can easily predict it's trajectory. So if you have position and momentum data of all particles in the universe, and you have unlimited computational power, you can predict their behavior (interaction, movement, etc.), and basically predict the future (stock market, weather, natural disaster, etc). However, the Heisenberg Uncertainty Principle states that it is impossible to collect information of particles's position and momentum with 100% certainty. The more certain you know about particle's position, the less certain it's momentum" and vice versa. So if somehow with the unlimited computational power you can predict particle's position at time with 100% accuracy, then your prediction error for its velocity will be infinity, which prevent you for making accurate further predictions, rendering your model useless. Hence, it's theoretically impossible to make 100% accurate prediction even with unlimited data and unlimited computational power. So Is The Universe deterministic or probabilistic? 100% prediction accuracy also means the universe is deterministic - there's only one possible outcome of the future. Einstein was on this side, citing "God doesn't play with dice". On the other hand, folks like Heisenberg, Max Born, Schrodinger, Oppenheimer, etc.., the founding fathers of Quantum Mechanics, viewed the future as set of possible outcomes each having it's own probability. Since market couldn't care less about anyone's subjective forecasts, I do predictions solely based on historic price dynamics in macro scale to stay objective and true with the market pulse rather than be bared with my endless interpretations of patterns. I don't need my consciousness to interpret because we already have a data derived from collective consciousnesses to work with. Chart is already a reflection of reality that captures the emotions of participants. In other words, it's a time fractal that exposes the essence of the market across timeframes. In turn the market itself is a function of trading time . These basis justify linking systematic fragments of cycles to work out the capacity of price action. Basically in Fractal Analysis, the question is how can direct metrics of the historic waves geometrically explain current and future price levels. The Fibonacci sequence is a mathematical concept that appears in various aspects of nature. This connection between mathematics and the natural world is a fascinating example of how patterns and structures found in abstract concepts like numbers can manifest in physical reality . Particularly, using Golden Ratio as a key rule that governs order in chaos. In TradingView, the "Fibonacci Channels" is a great tool to capture the waves (domestic certainty) and turn them into a probabilistic interconnected structure that captures the uncertainty of the market - the entanglement of price action. To start with it's vital to use log scale where percentages are equally captured in distances. So a 100% a growth, say a vertical distance from $40 to $80 measures the same distance as from $1000 to $2000. Besides, percentages are what drives people to feel emotions which affect market behavior (collective executions). Finding geometric relationship between waves, the use of log scale is a must. As I've done this before I want to show how market deviates near fibs. A Direction of 2013 HIGH ⇨ 2017 HIGH with bottom of 2011 gives next bottom 2015 at 0.618 after -86% drop. And also predicts the COVID bottom in 2019 after -72% drop as well as current level where price has cooled down locally. We can note that previous ATHs are explained with logarithmic curve. That's why we'd need another fib channel to connect 2017 HIGH ⇨ 2021 HIGH direction with previous bottom of -86% drop in 2015. FC of that direction predicts bottoms of 2018 (-84%) and covid 2019 (-72%) at 0.618 again. Together they produce an interference pattern covers significant historic price changes. To further interpret current levels though the chart itself, we can use line with angle of direction connecting 2021 double tops: This shows the capacity of how high the market might still grow before next significant correction, if the local fib to the price hasn't yet dimmed the bullish incentive. Another straight line can be used to connect 2019 COVID LOW (-72%) with 2022 LOW, because we might probably never see such price levels in the nearest future as price has broken out with high rate of change. Now it needs more time and bearish capacity to go there. This line can indicate the bottom of hypothetical correction, if it happens now. Other than that it's a clear trendline with almost 4Y wavelength. Since straight lines doesn't exist in nature, I didn't extend them to the right. Now we need a more adaptive version of it to connect recent local bottoms of the trend. That would be a logarithmic trendline, in other words curves to mimic the function of exponential growth. Therefore falling below it, might indicate a possibility of correction and even reversal. Each day if it fails to grow with the curve, the bears will get depleted. A cross below the logarithmic curve of spreading information would be a confirmation of new bearish incentive. This is simply done to work out boundaries as limits of the function that explains the market. Corrective wave has a timing of 15 days in respect to its domestic volatility properties, before it becomes bearish impulsive or continues the impulsive bullish wave. Curves as a function of trading time explain pretty much all historic bullrun growths. As if there is some kind of gravity that governs the trend or it's the PriceTime that curves with the emerging trend. Individual cycles can be too curved accordingly. So the more the price fails to break out that function, the more predictive curve becomes.
BITSTAMP:BTCUSDEducation
by fract
3
GOLD, will NFP finally start wave C?Hello everyone, Gold currently confusing traders as it switches between correctional movements and speculative pullbacks. From a technical point of view the 2067 level is now very important for the next move, which I expect to be a short one. Only a daily candle close above can invalidate the short scenario which would have the targets 1980 , 1920 and 1895 . The yellow triangle is a possible reversal zone for a wave 2 bottom and bullish move towards new ATH with targets at 2300 and 3000 . Looking at the big picture of Gold, it has been in a very long consolidation in the 1640 - 1980 range. So far every breakout attempt over the upper boundary has been sold within a few days. But with the break above 2000 related to the middle east conflict Gold was able to stabilize above 1980. Most likely the 1980 will be retested to built liquidity for a bullish move first. I suggest to go short to anticipate in wave C of wave 2. The reversal zone for this move is the current resistance 2060 - 2067. I will keep you updated if I see conformation or trading opportunities. If you have any questions feel free to contact me.
CAPITALCOM:GOLDShort
by Kyrean
BTC Correction Incoming: ICT Unicorn Model?This resembles an ICT Unicorn model (not sure if this is what you call it tho): Price obtained liquidity above, accompanied by a robust volume push-down to 38.5k, forming a breaker block coinciding with a Daily FVG. It's noteworthy that the current Breaker block level constitutes 50% of the present range, validating the corrective wave. Anticipating a price retracement to the daily FVG above 38k or completion of the corrective wave in the range of 32k-36k, where liquidity and an unfilled daily FVG are apparent. Please manage your risk because price can still go higher around that premium zone.
Short
by infamous7
9
GOLD, will CPI news confirm the downtrend?Hello everyone, after a predicted pullback from 1980 area Gold reached it's highest point at 2088 and turned bearish again. To be honest I didn't expect the move to extend so high, but these things can happen. Finally it's likely that Gold topped out wave B at 2088 and started wave C with the main target at 1920. So far nothing new (check my latest analysis). How will CPI news effect Gold tomorrow? There is no clear answer to this question, as we have to observe the next move of the dollar, which started a slight counter trend. If it will break over the local resistances formed within the last days, Gold will fall further. Important levels for Gold Resistance area: 2040 - 2050 Support areas: 2000 - 2010 and 1970 - 1980 Elliot wave analysis If wave C started at 2088, we probably have seen most of the first wave down, which you can see in red on the chart. I don't see an impulsive decline, so this scenario is quiet likely. The exact position for the subwave count are always hard to figure out, so please look for confirmation before you make a trade. Trade idea Sell 2032-2040 with TP 2010 and SL 2051 Buy 2000-2010 with TP 2030 and SL 1998
FOREXCOM:XAUUSDShort
by Kyrean