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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
USDJPY - Descending Channel Hello fellow traders, as we can see USDJPY is urgently trading in a descending channel and reached a point of resistance. This resistance is also confirmed by a key FIB level @.786. If this holds we can expect to see price move towards the next support around 128.00. Upgrade your trading with me For FREE SIGNALS and if you would like to see updates on this idea and many more please follow: @wrightwayinvestments @wrightwayinvestments @wrightwayinvestments ✅ Hit the like button, and share for more!
Short
by WrightWayInvestments
#GBPUSD Analysis By We Trade WavesHey Traders, this is GBPUSD Analysis and update for all of you, is it forming an Ending Structure or a Leading Structure? You can trade any of the above waves if you get your setups. I will be looking for sell setups from current levels or above the top/Reaction zone. DO NOT JUMP IN - Jumping in without using stop loss or risking big or following anyone blindly leads to big losses, never do that. Always wait for your setups and use proper risk management! If you want us to post more charts, setups and explain more about the next move, make sure to follow us, like and comment. What we are sharing here is only our point of view on what could be the next move in the market based on our wave analysis concept so this is a directional bias and not signals... DO NOT FORGET "We Trade Waves" 4 GOLDEN RULES: 1) Do not over-risk 2) Do not over-trade 3) Do not trade without stop loss 4) Never ever add to losing position DISCLAIMER: We Trade Waves is not a signal service. Instead, it involves sharing our perspective and detailed analysis based on our unique wave analysis concept. We cannot be held responsible for any financial gain or loss that may result from following our analysis. Trade with care We Trade Waves Team
by WeTradeWAVES
3
2 roads ahead for NVDAMy take on NVDA from an Elliott Wave perspective. Maybe it will help someone. After clearly an impulse wave down who finished on 13th October 2022 that's intermediate wave (A) we have 2 scenarios: Scenario nr 1: Bearish We have an ABC zigzag pattern finished.Why? We have multiple Fibonacci ratios pointing for a top in NVDA.one of them 1.618multiple for minor wave C. If this is the right count what we need to see further is an impulsive wave down for intermediate wave (C) Scenario nr 2 Bullish This Fibonacci ratio of 1.618 is almost a trademark for wave 3 in an impulse wave. So key levels here to watch are 0.236 and 0.382 retracements. If this is a shallow time consuming retracement with all the signs of a wave 4 we will still have wave 5 to go. What do you think? Legal Disclaimer: The information presented in this analysis is solely for informational purposes and does not serve as financial advice.
NASDAQ:NVDA
by WavesInvesting
1
Update to my Nov 5th 2022 Chart for AAZ - Elliot Wave analysisIn this chart, I am zooming in for closer look at the chart over the last 26 months. Jan 2021 was the peak of the first Major Wave 1 which ran from 2.5p to £1.825 & which consisted of a clear 1,2,3,4,5 pattern. From Jan 2021 the Corrective Major Wave 2 then took hold and saw the price fall from £1.82 all the way back down to 62p on 13th October 2022 in a typical A,B,C Zig-Zag Correction. Since that date, the price action has been very constructive and we have now seen an initial 1,2,3,4,5 advance (from 62p to £1.18) & then another A,B,C Zig-Zag correction from £1.18 back to 90p (50% Fib retracement). Over the last month the next Motive Wave has got underway wit the price now having moved swiftly to £1.12 & has cleared (B) of the Corrective Wave 2 - first buy signal confirmed. The longer term £3+ price target remains intact and near-term £1.75 looks highly likely as then Motive Wave gathers followers and steam.
LSE:AAZLong
by mattjoss
USDJPY - Bullish IdeaAs shown USDJPY has broken out of the bearish channel and showed and showed support with a bullish momentum with a double bottom and by jumping from the trend line of the bearish channel. Moving forward we can expect USDJPY to continue moving towards the target levels of 134.000, 137.000, and 140.900 with an invalidation level of this idea being at 127.996. Upgrade your trading with me For FREE SIGNALS and if you would like to see updates on this idea and many more please follow: @wrightwayinvestments @wrightwayinvestments @wrightwayinvestments Hit the like button, and share for more!
Long
by WrightWayInvestments
2
XAUUSD - Short Term Bullish Momentum XAUUSD is currently showing signs of a short term bullish momentum. After showing a break of structure and reversing to the downside it looks like XAUUSD has met a nice level of support where it may continue showing bullish movement until it reaches around the 1900-1925 level where we should see a strong resistance. After reaching the 1900-1925 level we should see a strong bearish movement. To further this bearish sentiment this level would also be the second wave of the Elliott Wave Theory which would be followed by the 3rd wave. The 3rd wave is usually regarded as the most volatile and impulsive wave of the EWT which would be a great place to enter. The next form of support that can be seen after should be around the 1777.500 area. Upgrade your trading with me For FREE SIGNALS and if you would like to see updates on this idea and many more please follow: @wrightwayinvestments @wrightwayinvestments @wrightwayinvestments ✅ Hit the like button, and share for more!
OANDA:XAUUSDLong
by WrightWayInvestments
Bitcoin Weekly AnalysisIt’s the first week of March, let’s take a look at the Bitcoin chart to see what price action we might expect in the near term. Let’s start Big Picture on the Weekly Time Frame. Taking the Primary trend from the December 2018 low to the recent Nov 2021 high, we can clearly see a 5 wave structure which meets the Elliott Wave definition of an Impulsive move. Note here that while Wave labelling on the price action alone can be somewhat subjective, the MACD 4C allows a much crisper visual wave definition. Of particular importance here is, using the MACD, we see a convergence between waves 1 & 3, indicating trend continuation likely, while divergence appears between waves 3 & 5, suggesting a change in market behaviour to come. Supporting evidence is provided in the volume signature. We see Supply entering at the top of the structure, with diminishing demand. In sum, this makes a compelling argument for the nearing of the end of the larger movement, which is further confirmed as the price falls below the supply line. At this point, we can start to expect a reversal or a consolidation into a trading range. Note here that volume can be interpreted either in traditional columns or in wave form, which displays accumulative volume, thanks to David Weiss's Weiss Wave. “Buying waves are followed by selling waves in a seesaw battle until one side gains the upper hand”. David H. Weis Chart#1: Once the price has broken down through the supply line, we can apply a Fibonacci retracement tool, based on the entire Impulsive move-up, to provide target levels we can expect to see during the retracement. Note here of interest how the price behaves at each level, often testing, retesting, and ultimately using either as support or resistance. Looking at chart #2, we see the price has successfully retraced all of the key levels, right down to the 0.78. At this point, we see a change in behaviour, as the price breaks the trend line and consolidates. Further, on the Daily TimeFrame, we now have what I see as a 5 wave corrective structure. (Note; this can also conform to Elliot Wave’s 3-wave ABC correction, with an extended C wave for those who strictly adhere to Eliot Wave Principles). Of significance here is that we see a divergence between Waves Y & Z. In addition, ultra-high volume signatures are entering the market, indicating possible strong demand emerging. Chart#2: At this point, we can start to expect a more significant retrace of the corrective move. By inverting the Fib Retracement and applying it to the corrective move, our first initial target is 0.236, which is in the 28000 regions for BTC. In further support of this target, we have still to see a significant retest of the Low that Created the High of the prior Impulsive move, which would be Wave 4 (see Chart#3). Ideally, for the continuation of the Trend, we would like to see this final Low breached by a sharp Impulsive move on high volume, with a retest and consolidation, turning this level into solid resistance before a continuation. In our Chart#3, Wave Y fulfils the criteria of a sharp impulsive move down, yet has still to significantly retest this area. A retest of Wave 4 Lows would be in the 29400 price region for BTC. So we have a strong case for further upside, but are we out of the woods yet? Let’s look closer on the Daily & 4 Hr. Chart#3: On Chart#4 we see Supply entering and price getting rejected at the high of Wave X. Until this price level is broken, we can’t confirm a change in structure. Within Wave Z we have an internal high, which preceded the ultimate low of 15473. This level has been breached, subsequenlty retested, allowing us to retest the broken trend line. Is there an argument for a further retest of this level? Certainly. To support this, we can apply the Volume Profile fixed range tool to the entire corrective move. We see here that the high volume at price level (Point of Control POC) or the highest level of liquidity is at the 20700 area. We know that price likes to move from one high liquidity zone to another, so there is a strong case for a return to this region. Of comfort to the Bulls is that price so far has remained above this level, indicating that the volume that entered the market was on balance mostly demand, as prices subsequently rose. Chart#4: Let’s now go to the 4hr to further inspect the most recent price action. We see here (Chart#5), we have divergence, and price has broken the trend line indicating we have a possible a change in behaviour (either a consolidation or reversal). We have retraced to the 0.236 fib, but this is yet to be retested to act as short-term resistance. We have seen a sharp, impulsive move down to be followed by choppy sideways action. This would suggest the down move is yet to be completed, and a further sharp wick down to the high liquidity 20600 - 21600 region is likely. Let's go further into the 1hr., Chart#5: Zooming right in, looking at the corrective move from the recent 25300 highs, the argument for continued downside seems solid. We have yet to see divergence on the smaller time frames. We have yet to see a retest of either the recent high volume bar or the larger liquidity pool in the 20600 - 21600 region. On the other side, as mentioned, we have yet to see the 29000 region tested. At this point my bias would lean towards a sharp push down in price to the high liquidity zone, followed by an impulsive move up, trapping shorts, and a grind up to 29000. If you enjoyed this analysis or would like me to analyse any of your crypto coins please contact me. Thanks, Tom.
INDEX:BTCUSD
by illuminiF0x
USDJPY CARRY TRADE UPDATEFrom a technical standpoint we can see both momentum and trend intensity (angle) increasing. The retests in USDJPY are becomming less frequent and not as deep. Chances of continuing to the fib extension area of 138 is extremely high. Fundamentally the new BoJ gov nominee is known to be very DOVISH, Japanese yen should continue coming down to earth. Which makes the long term outlook of this pair rather difficult to analyze, however from a medium term a trip to the next fib zone should be expected
Long
by NakedTrading4U
1