Understanding Elliott Wave

Amazing technical analysis is the Elliott wave that makes an attempt to forecast trends in price movement. Elliott Trend Theory originated by Rob Nelson Elliott in the late 1920s. He uncovered that the stock market segments traded in repetitive periods. Elliott learned that these market cycles resulted from people’s psychology. He found that the upward and downward always showed up in the same recurring patterns, which is sometimes called “waves”.elliott wave theory

Elliott made detailed stock market estimations based on the influx patterns. An impulsive say, which goes with the key trend, there are five waves in its style. On the smaller scale, within each one of the impulsive waves, there are also five surf. 

When a price gone up, it is usually followed by correction or corrective wave. The Elliott Wave Theory says that five waves move around in the direction of the key tendency will be accompanied by 3 corrective waves (a 5-3 move). This 5-3 move then becomes two neighborhoods of the next higher 5-3 wave. So one complete Elliott wave involves eight waves of two phases: five-wave impulse stage, and the three-wave further phase.

The impulsive Say have five wave: you, 2, 3, 4, and 5. Wave 2 and 4 are small further wave in the increasing trend. In the further wave, there are 3 wave: wave A, M, and C. Wave W is the small specialized rebound in the lowering trend.

An investor discovering the Elliott Wave can ride the Wave 3 and 5 and came into a long trade. That they can also enter a short trade during at Wave A and Say C.

Leave a Reply

Your email address will not be published. Required fields are marked *