Elliott wave course – Set price targets using Elliott wave.
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welcome back to module number four of this mini elliott wave course, which I am calling catching market tops and bottoms
using elliott wave theory module four is about selling price targets
so i'm going to go through using larger waves structures to find likely targets using elliott wave analysis.
I will go through common wavelength relationships and how that gives you potentil targets for particular price moves of the structure
and how that translates into charting and trading
I will again use the Dollar Yen example and show you what it means for the overall trend and overall price target for this market
using these techniques
so let's get in there and get to the chart
ok so setting price targets using elliott wave theory
First I'm going to go through the wave 'A' and 'B' relationship.
so we know that the dominant trend is to the upside,
we know that we're expecting at least a three wave move to the upside in ABC form.
But how do you do when you've reached the end of wave 'B' and how do you know where wave 'C' is likely to come in?
Well there's a few kind of basic ground rules that you can use to help predict the depth of a correction
or the likely length traveled of the next trend move.
So first of all we go through the relationship between wave a and B, the first thing I always do when I think a wave is complete,
I will get a Fibonacci extension and extend that Fibonacci grid over the extent of the whole wave,
Now I know that in an a/b relationship, usually wave B will retrace to about fifty percent of the length of wave A.
So you could immediately say that you would at least target a 50% correction, this could be used for wave 2 also, because wave 2 is is usually a
deeper correction than wave 4,
and we'll get in here to this wave 1/2 relationship in a minute.
wave 2 and wave B will usually retrace at least fifty percent of the previous move,
another point to target for the wave A/B relationship is the low of the previous fouth wave low of one lesser degree now the degree.
When we look at this overall trend move, it is a large a and B labeled here in red, that's one large degree labeling.
the next lower degree is the internal waves that make up that wave A, and wave B and they're labeled
That would be wave 4 here in blue, would be the fourth wave of one lesser degree.
so we can get target line at 96.00.
Using those two scenarios we have a target range here of between 96.00 and about 100.00.
it's about a 400-point range but we know that maybe we could be expecting that sort of action to the downside so that's the wave A
and B relationship
how about we look into a wave 1/2 relationship that will get down here into this this lower degree move.
so here we have our wave 1/2 and structure off the price low at 75.56,
off that price low we had an impulsive structure to the upside, i'm going to label that for you know so we have one impulsive move and
then we had a three wave correction, which actually happened in a flat correction to the low here, and
then we had the power move in wave 3 the longest and strongest wave.
That wave 3 topped out and then we have a short correction in wave four and then we had five internal waves in wave
five itself 12345.
like I said wave 2 and B tend to be a deep correction, and wave 2 would also retrace into the territory of
wave 1 of 1 lesser degree.
So let's look at that we we can already see that we have a deep correction right into the price territory of wave 1 of 1 lesser degree
for wave 2 itself you can at least expect a 50-percent retracement most likely you would get 61.8 retracement.
let's look at that and see how that actually turned out,
from the low here up to the price high at wave 1, now price actually dipped below that
but that would be our initial target zone,
between 50% and 61.8% and with the likelihood that that price would get back into wave 1
territory at one lesser degree
so overall we can say that the wave 1/2 relationship is quite likely to hit 61.8% retracement.
and again most likely to come back into the price territory of wave one at one lesser degree
let's round off what we just talked about here
so now we've projected some retracements
and picked target points and target levels for those retracements.
so let's make a prediction for wave 'C' here
the next move back into trend again let's see if we can read the tea leaves!
and see what the wave principal might suggest for the top of wave C.
So again we'll get our trend Channel
and place it from the price low to be tangential to the wave B low
and then the top trend line will project from the top of wave A.
Wave c is projected to be in the area of 150 and I reckon it may even pop out over that because a C wave is usually far more powerful than wave A
so it comeson quicker and it would probably throw over to the topside of the trend channel here.
so what we would expect is five waves up in wave c to complete around 150 area
What we can do again, is to to get our Fibonacci grid and I can project from the price low and then we take that grid and we
move it to the wave B low
and this again gives us another price target at about 148.90 so now we
have a very tight price band between 148.90 and 150.55 about
in terms of the length of this wave in in
points travels at about 5000 points to the upside
in terms of the time that we would probably take for this wave to unfold
let's see what the wave principal my say about that
we can take a line the trendline and just stretch it between the low of wave A and the high of wave A the wave principle would
say that we have C would pump would travel the same distance point but it may well also suggest that
say wave C will take the same amount of time to unfold projecting the the time it took for
wave A to complete and was about four years
bottom to top and projecting that time from the way B low and that gives us another four-year time
scenario and that get brings out to about 2020.
so the wave principle in general would say
that wave C to the upside is going to be about 5,000 points when this market has got right back into
trend again and it will take another possibly four years to complete
it will take five waves in structure
and when it tops out we can expect the market to possibly retrace the whole move if this
is a corrective structure to the upside
so that's making price projections using elliott wave theory
next video is about trade entry and trade entry strategies and stop loss strategy