Elliot Wave
Elliot Wave
Elliot Wave
(https://www.humbletraders.com/)
By using Elliot wave analysis, you will learn to see trend changes coming,
(http://humbletraders.com/elliott-wave-tops-and-bottoms-lesson-1/)
Stick around;
I am going to show you 5 practical areas where Elliott
Wave helps a trader:
( click the link for a video tutorial )
1. Identify the dominant trend.
(http://humbletraders.com/elliott-wave-tops-and-
bottoms-lesson-1/)
2. Identify countertrend moves.
(http://humbletraders.com/elliott-wave-tops-bottoms-
lesson-2/)
3. Identify maturity of a trend.
https://www.humbletraders.com/elliott-wave-theory/ 1/8
8/7/2019
y y
RIDING THE ELLIOTT WAVE - [ 5 ways to catch market Reversals ] - HumbleTraders
(http://humbletraders.com/elliott-wave-tops-bottoms-
lesson-3/)
4. Setting price targets.
(http://humbletraders.com/elliott-wave-tops-bottoms-
lesson-4/)
5. Placing trades and setting stop losses.
(http://humbletraders.com/elliott-wave-tops-bottoms-
lesson-5/)
.
The wave principle views the price movements of the market as being part of an overarching
pattern. There are three main descriptive features of the wave principle.
1. The patterns exist at all degrees of trend, (from a yearly chart, down to a minute chart)
2. The patterns are fractals, that is, they are self-similar at all degrees of trend
(http://humbletraders.com/elliott-wave-degree-labels/).
3. The patterns are hierarchical, meaning smaller degrees of the pattern link together to
construct larger versions of the similar pattern.
(http://humbletraders.com/wp-content/uploads/2016/03/ready.jpg)
https://www.humbletraders.com/elliott-wave-theory/ 2/8
8/7/2019 RIDING THE ELLIOTT WAVE - [ 5 ways to catch market Reversals ] - HumbleTraders
The wave principle states that the basic form of market price action is ve waves in the
direction of the trend and three waves against the trend.
Moves in the direction of the trend are labelled 1 through 5 and counter trend moves are
labels as letters, usually A,B and C.
These are EXACT price patterns I used for years to generate signals
(http://humbletraders.com/elliott-wave-signals-forex-trading/) and steadily grow my
trading account while taking minimum risk.
The most common statement in the investment world is ‘the trend is your friend’, wouldn’t
be great to be able to identify the trend.
Well:
Here are ve areas where the wave principle can help identify the dominant trend.
It is far easier to trade in the direction of the dominant trend than to ght against it,
If you can identify the trend then you can get on board and Elliott wave analysis will allow you
to ride that trend until the end.
(http://humbletraders.com/wp-content/uploads/2016/03/elliott-wave-1.jpg)
You can see wave [A] down marked in black, followed by an ongoing corrective pattern called
a contracting triangle which will complete wave [B] soon.
https://www.humbletraders.com/elliott-wave-theory/ 3/8
8/7/2019 RIDING THE ELLIOTT WAVE - [ 5 ways to catch market Reversals ] - HumbleTraders
We know from the Elliott wave pattern that this will be followed by a wave [C ] down.
The wave model foresees much lower prices for this pair as the trend reasserts itself.
The impulsive trend will unfold in ve distinctive waves, which will then be followed by a
three wave corrective move.
Knowing this will allow a trader to position themselves for when the larger trend resumes.
You can see wave [A] red completed in ve waves, wave [B] down in three waves is complete.
Wave [C] up is about to begin as I write, and should carry the market above the wave [A] high.
While no method of market analysis is perfect, the Elliott wave model does give the
practitioner a perspective for possible future action which gives you time to prepare and
de nite target zones to aim for.
(http://humbletraders.com/wp-content/uploads/2016/03/elliott-wave-turning-point-
2.jpg)
https://www.humbletraders.com/elliott-wave-theory/ 4/8
8/7/2019 RIDING THE ELLIOTT WAVE - [ 5 ways to catch market Reversals ] - HumbleTraders
But the Elliott wave signal And then the decline began, an 80% freefall began in July that year.
And Robert Prechter was well positioned, as was Paul jones.
(http://humbletraders.com/wp-content/uploads/2016/02/elliot-wave-2.jpg)
4. Price targeting.
One useful element of the wave principle is its ability to provide price targets. When used in
conjunction with Fibonacci proportions
(http://jwilson.coe.uga.edu/emat6680/parveen/ b_nature.htm)we can construct high
probability price targets.
For example a common relationship between wave 1 and 3 is 1.618. And a common
retracement level for wave 2 is .618 of the previous wave 1 advance.
These relationships allow us to create a high probability target for wave 3. And also allows us
to protect our pro ts in case we are wrong.
https://www.humbletraders.com/elliott-wave-theory/ 5/8
8/7/2019 RIDING THE ELLIOTT WAVE - [ 5 ways to catch market Reversals ] - HumbleTraders
The wave principle has 3 steadfast rules which can never be broken when interpreting the
price action.
If the price action breaks any of these rules then the count you are operating with, is wrong.
The advantage of these rules is that you can use them to place protective stops or trail stops
closer to the action, if the wave structure is not working out as planned.
Below shows a model of how a trend might develop, you notice the development of 5 waves
up and then a retracement of the advance to the Fibonacci 0.618% decline level.
Well:
At this point a trader can turn bullish under the wave principle. As the price is expected to rise
at least the same magnitude as wave (1). As wave (2) cannot retrace more than wave (1) a
protective stop can be placed one point below the start of wave (1) ensuring that you will not
risk any more than necessary.
As the price advances in another clear 5 waves to complete wave (3) up, a protective stop can
be placed at the high of wave (1) for we know that wave (4) cannot enter the price territory of
wave (1). Thereby protecting the pro ts earned.
From my experience, the wave principle can genuinely help you see how the market may be
positioned within the overall pattern.
The Elliott wave principle will help you spot these big opportunity turning points
(http://humbletraders.com/elliott-wave-and-rsi/) before they happen!
If the model is applied correctly it can increase the predictive con dence in the direction of
future price moves to 80% and more.
https://www.humbletraders.com/elliott-wave-theory/ 6/8
8/7/2019 RIDING THE ELLIOTT WAVE - [ 5 ways to catch market Reversals ] - HumbleTraders
All the while providing the practitioner with clear levels where the interpretation is incorrect.
Trading is not that easy, but then again nothing worthwhile is, so don’t give up easily!
As the expert Paul Jones says:
“I’m always thinking about losing money as opposed to making money. Don’t focus on making
money, focus on protecting what you have”
Any method that can help achieve this goal is a method worth trying.
42C.O.T
pages E-Book teaching you the most Blog successful Trading
Strategies
(http://www.humbletraders.com/commitments-(http://www.humbletraders.com/trading-
of-traders/) concepts/)
Strategies include Momentum and Role Reversal, Heikin-Ashi, RSI and Moving Average
Fed watch
Crossover, Trading
Candlesticks and more. This E-Book contains Strategies instructions,
step-by-step
(http://www.humbletraders.com/fed-
examples to teach you how to trade pro tably. (http://www.humbletraders.com/trading-
watch/) strategies/)
us/)
https://www.humbletraders.com/elliott-wave-theory/ 7/8
8/7/2019 RIDING THE ELLIOTT WAVE - [ 5 ways to catch market Reversals ] - HumbleTraders
us/)
Trading Courses
(https://school.humbletraders.com/courses)
Disclaimer
(http://www.humbletraders.com/disclaimer
o
pr
d
/
hm
t
Copyright © 2016 humbletraders.com
(https://www.facebook.com/HumbleTraders/) (https://twitter.com/HTrader121)
(https://plus.google.com/+Humbletraders121/)
https://www.humbletraders.com/elliott-wave-theory/ 8/8