Elliott Wave with Why

  The five-wave pattern is a fundamental concept in Elliott Wave Theory, representing the directional movement of prices within a trend. This pattern consists of five distinct waves: three impulsive waves moving in the direction of the main trend and two corrective waves moving against it. Here’s a detailed breakdown of the structure of a five-wave pattern:   Structure of a Five-Wave Pattern 1. Wave 1:    - Direction: Moves in the direction of the main trend (up or down).    - Characteristics: Typically the initial move that starts the trend. It may not be easily recognizable at first because it's often viewed as part of a correction to the previous larger trend.    - Volume: Usually accompanied by increasing volume, but this can vary. 2. Wave 2:    - Direction: Moves against the main trend, retracing a portion of Wave 1.    - Characteristics: A corrective wave that typically retraces 38.2% to 61.8% of Wave 1, but it can never ...

  Corrective waves are essential components of Elliott Wave Theory, representing the counter-trend movements that occur within the larger trend. They typically consist of three sub-waves and can take various forms. Understanding their characteristics helps traders anticipate potential reversals and corrections. Here are the main characteristics of corrective waves:   General Characteristics 1. Three-Wave Structure:    - Corrective waves generally consist of three sub-waves labeled A, B, and C.    - This pattern can sometimes extend into more complex structures like double or triple threes. 2. Counter-Trend Movement:    - Corrective waves move against the direction of the preceding impulse wave.    - In an uptrend, corrective waves move downward. In a downtrend, they move upward. 3. Lower Momentum:    - Corrective waves typically have lower momentum and volume compared to impulse waves.    - Price movements are often c...

  Identifying an impulse wave is crucial for traders and investors who use Elliott Wave Theory, as impulse waves are the primary building blocks of trends. Here’s a detailed guide on how to identify an impulse wave: Characteristics of an Impulse Wave An impulse wave is composed of five distinct sub-waves that move in the direction of the main trend. These sub-waves are labeled as 1, 2, 3, 4, and 5. Here are the key characteristics: 1. Wave 1: The initial move in the direction of the trend. 2. Wave 2: A corrective wave that retraces a portion of Wave 1. 3. Wave 3: Typically the strongest and longest wave, extending beyond the end of Wave 1. 4. Wave 4: Another corrective wave, usually less severe than Wave 2. 5. Wave 5: The final move in the direction of the trend, often showing diminishing momentum compared to Wave 3.   Rules of Impulse Waves To correctly identify an impulse wave, certain rules must be adhered to: 1. Wave 2 cannot retrace more than 100% of Wave 1. This means Wa...

  Developer of Elliott Wave Theory Elliott Wave Theory was developed by Ralph Nelson Elliott in the 1930s. Elliott, an accountant by profession, observed that stock markets did not move randomly but followed predictable patterns, which he called "waves." Classic Theory vs. Modern Theory Classic Elliott Wave Theory - Foundation:   - Developed by Ralph Nelson Elliott, the original theory is based on the observation that markets move in repetitive cycles of five waves in the direction of the main trend (impulse waves) and three waves in the corrective phase.   - Impulse Waves:   - Consist of five waves (1, 2, 3, 4, 5). Waves 1, 3, and 5 move in the direction of the primary trend, while waves 2 and 4 are corrections against this trend.   - Corrective Waves:   - Consist of three waves (A, B, C) that move against the primary trend.   - Wave Degrees:   - Elliott identified nine degrees of waves, from the smallest "subminuette" to the largest "grand super...

  A complete Elliott Wave cycle consists of ** eight waves **. This cycle is divided into two main phases:   1. Impulse Phase (5 Waves) The impulse phase includes five waves that move in the direction of the main trend: - Wave 1: The initial movement in the direction of the trend. - Wave 2: A corrective wave that retraces part of Wave 1. - Wave 3: The strongest and longest wave in the direction of the trend. - Wave 4: A corrective wave that retraces part of Wave 3. - Wave 5: The final wave in the direction of the trend. 2. Corrective Phase (3 Waves) The corrective phase includes three waves that move against the direction of the main trend: - Wave A: The initial wave against the main trend. - Wave B: A wave that retraces part of Wave A, often making it look like the main trend might resume. - Wave C: The final wave that completes the correction and often equals or exceeds the length of Wave A.   Summary of a Complete Elliott Wave Cycle - Impulse Waves (5 waves): 1, 2, 3, ...

     In Elliott Wave Theory, a wave cycle is a complete sequence of price movement that includes both an impulse phase and a corrective phase. This cycle captures the progression of a market trend and its subsequent correction, following the basic structure of the theory. Here’s a detailed breakdown:   1. Impulse Phase (5 Waves) This phase moves in the direction of the primary trend and is composed of five waves: - Wave 1: The first wave in the new trend direction, often modest as it represents the initial change in market sentiment. - Wave 2: A corrective wave that retraces a portion of Wave 1, typically by 38.2%, 50%, or 61.8%. - Wave 3: Usually the strongest and longest wave, driven by increasing investor enthusiasm and higher trading volume. It often extends 161.8% of Wave 1. - Wave 4: A corrective wave that retraces a portion of Wave 3, usually less volatile and often not overlapping with the price range of Wave 1. - Wave 5: The final impulse wave in the trend d...

  The Elliott Wave Theory, developed by Ralph Nelson Elliott in the 1930s, is a form of technical analysis that traders use to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology, highs and lows in prices, and other collective activities. The main components of an Elliott Wave are: 1. Impulse Waves Impulse waves move in the direction of the main trend. They consist of five sub-waves and follow a 5-3 wave pattern, meaning they are made up of five smaller waves that trend in the direction of the larger trend. These waves are labeled as follows: - Wave 1: The initial move up. - Wave 2: A correction of wave 1. - Wave 3: The longest and strongest wave, moving in the direction of the trend. - Wave 4: A correction of wave 3. - Wave 5: The final leg in the direction of the trend.   2. Corrective Waves Corrective waves move against the direction of the main trend. They consist of three sub-waves and are labeled as A, B, and C. These...