Elliott wave course – define maturity of trend using Elliott wave.
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In this video I explain how to define maturity of trend in any market price using Elliott wave theory.
- so welcome back to the module number three in our mini course and entitled catching
market tops and bottoms using Elliott wave theory.
Module number three itself is titled how to identify the
maturity of a trend within an elliott wave structure in both Impulse and corrective waves
A five wave movement these defines the dominant trend and they're labeled variations of 12345 on the main labeling
it's common within the structure for wave three or five to extend
and i'll show you how that happens
Also I will go through Fibonacci relationships between waves
and given price targets for possible completion of those waves.
Corrective waves are the the other type of wave within elliott wave theory.
These are three wave movements against the direction of the dominant trend
so they are labeled either ABC or wxy
An ABC labelling would be a simple corrective form
Whereas w x y would indicate a complex corrective form
Corrections are overlapping and undecided affairs.
corrections happen against the impulse of the market.
And they are counter to what the market desires to do.
so they tend to happen with a lot of trouble and a lot of trauma basically in the price structure.
any corrective move will be retraced fully, and the overall correction will find it very hard to make any inroads into the price structure at all.
and any movement it doesn't achieve will be in a very troubled way and I'll go through that on
the chart and show you how that that plays out on the chart itself.
Corrections retrace on average about fifty percent of the trend move and the support should come in around the
previous forth wave low.
So we'll go through corrective waves using the dollar-yen example and how to project the maturity of any particular type of
so let's get in there and we'll go through how to identify maturity of trend
ok so here is our dollar yen chart again in weekly bars
the first two videos we have defined the dominant trend
and then we defined a correction
So we defined the dominant trend as upwards in a possible a b c corrective rally overall
this is a long-term trend, obviously in weekly bars so it's taking years to play out.
So what this dominant trend suggests for the future is a rally in wave C,
which I think at this stage we probably is done now.
But a rally in wave C and probably peek out somewhere around 140 to 145 area.
So let's go through and define the maturity of trend which this video is about
and there are some techniques that you can use in order to to get a grasp on on how far along your trend move is
so what we've decided already is that this is an ABC correction to the upside so we'll work with that first of all
First we get a trend channel,
An ABC correction should fit within a nice trend channel
so we'll start at the very low and we will project the bottom line of the trend channel
So we want to connect the very beginning of wave at the very extreme price low of 75.47
I want to get the trend line to be tangential to the bottom of the b-wave here then we grab
the the top line and connect to the top of our wave a
that gives us a parallel trend channel
now the next thing we're going to do is to take a trendline and extended the length of the full
wave and i'm going to project it from the bottom of the b wave
and we get a tangent point here to the top let's just read that price to see that price target for that would be where the A wave and the C-wave
are equal in length is at about the 145 to 150 range.
of course we don't know what is actually goning to happen but as this market moves on
this is the broad stroke best-guess scenario.
so we defined the dominant trend as an ABC correction to the upside
and we figured that wave B is most likely over
And that we're moving now into a trend move again in wave C
the trend should take at least three years to complete this upward rising wave C
so right now we know that this trend is quite immature it's nowhere near complete yet
Overall trend move should move to the upside in a rally in wave C which would take us up to the 150 area i wouldn't be surprised to
see a pop out over that top trend channel there if it's a simple Zig Zag correction
if the simple zigzag overall trend move so that would happen in the 535 wave form.
wave C will take a five wave move to the upside to complete
we see now how does this help of your overall trading and charting analysis
well knowing where you stand within the overall trend
means you can orientate yourself towards planning to trade that trend later on
so if we know that this trend is not complete
this overall pattern here is not complete and and we
know where we may stand within that trend
Then we know that we may have completed wave A and B with leg up in wave C,
well knowing where we stand within that trend means we know the point to where we should be lining up to trade
So in the next module we will make some predictions for the future so lets get on to
module number four
how to set price targets using Elliott Wave theory.