Category: 2. Elliott Wave Theory

Here’s a summary of what we covered regarding the Elliott Wave Theory: Elliott Waves are fractals. Each wave can be split into parts, each of which is a very similar copy of the whole. Mathematicians like to call this property “self-similarity”. A trending market moves in a 5-3 wave pattern. The first 5-wave pattern is called impulse wave.… Continue reading Summary: Elliott Wave Theory

This is probably what you all have been waiting for – drumroll please – using the Elliott Wave Theory in forex trading! As an Elliott Wave trader, you will be spotting “wave counts.” This means that you will be labeling the waves to see how they conform to the Elliott Wave pattern, to try and anticipate future price movement.… Continue reading How to Trade Forex Using Elliott Waves

As you may have guessed, the key to using the Elliott Wave Theory in trading is all about being able to correctly identify waves. By developing the right eye in recognizing what wave the market is in, you will be able to find out which side of the market to trade on, long or short. There are THREE… Continue reading 3 Cardinal Rules of the Elliott Wave Theory

Like we mentioned earlier, Elliott waves are fractals. Each wave is made of sub-waves. Huh? Let me show you another picture. Pictures are great, aren’t they? Yee-haw! Do you see how Waves 1, 3, and 5 are made up of a smaller 5-wave impulse pattern while Waves 2 and 4 are made up of smaller 3-wave… Continue reading Fractals: Elliott Waves Within an Elliott Wave

The 5-wave trends are then corrected and reversed by 3-wave countertrends. Letters are used instead of numbers to track the correction. Check out this example of a smokin’ hot corrective 3-wave pattern! Just because we’ve been using a bull market as my primary example doesn’t mean the Elliott Wave Theory doesn’t work on bear markets. The same 5-3 wave… Continue reading Corrective Waves

Elliott Wave is a form of technical analysis that was developed by a dude who noticed that financial markets move in repetitive patterns due to underlying crowd psychology based on greed and fear. Back in the old school days of the 1920-30s, there was this mad genius and professional accountant named Ralph Nelson Elliott. By analyzing closely… Continue reading Introduction to Elliott Wave Theory