If you are like me, then you are constantly on the lookout for trend changes in the market!
In every market cycle, extremes of bullishness or bearishness overcome the crowd at the end of a trend.
At times like these,
the Elliott wave principle tells me to start looking for the exit.
Here's my 5 part advanced Elliott wave training course which will help you identify those big turning points!
I go through general Elliott wave theory basics, and show 5 practical areas where Elliott Wave helps you as a trader:
Check out my Elliott wave mini course!
1. How to identify the dominant trend.
The 'Dominant trend' is a way of describing a movement of market prices in one general direction, up or down.
How does elliott wave analysis work ?
Well the very first thing we want to do when analyzing a market price pattern, is to figure out what direction the dominant trend is going in that market.
When we know the general price trend,
we can then start to analyse the internal waves within that trend move in order to label the pattern correctly.
Elliott wave analysis works by helping us visualize the range of possibilities for the next move in prices.
Thereby helping us get ready for that move.
2. Identify counter-trend moves.
To know where the price sits in a trend, first you must know know how many waves there are in Elliott Wave Theory.
Trend maturity refers to how advanced the price is along a particular wave pattern.
The five wave pattern itself includes three motive waves and two corrective waves.
Corrective waves come in many different types and combinations.
And If you thrown a few corrections together, you could end up with a huge structure which can almost be undecipherable!
In this video I examine a five wave structure and I label it while figuring out how advanced the structure is.
3. Identify maturity of a trend.
How to know if an Elliott trend wave is ending?
There are a few major tells which will signal the end of a trend.
First is the overall wave count;
A trend will end when wave '5' is complete.
Wave '5' itself, will trace out an internal five wave pattern.
Elliott wave 5th wave characteristics:
When you have a completed five waves,
you can look for the characteristics that go along with a fifth wave.
Here is a list of the main characteristics of each wave:
1 Trace out five waves internally.
2 retraces 0.382, 0.5 or 0.618 of Wave 1 length.
3 Extends to 1.618 or 2.618 of Wave 1 length.
4 Retraces 0.382 or 0.5 of Wave 3 length.
5 Extends 0.382, 0.5 or 0,618 or 1.00 of Wave 1 length
Elliott wave 5th wave extension:
A fifth wave extension occurs usually at the end of a larger trend move.
This is commonly called a 'throw-over' and carries price out above the trend channel.
Fifth wave extensions usually extend to a Fibonacci 161.8% of the length of wave '1'.
And fifth wave extensions end with a bang, meaning they are completely retraced when complete.
4. Setting price targets.
You may have an idea about the next direction for prices.
But, do you know how far the next wave will travel?
In this video we look at using the larger wave pattern to set price targets for the market.
And how to use wave Fibonacci relationships along with elliott wave rules and guidelines to set those price targets.
5. Placing trades and setting stop losses.
If you think a trade is on going by the elliott wave pattern.
Then we can use the developing price pattern to setup a low risk trade.
In this video we look at the elliott wave impulse pattern and how that pattern gives us the opportunity to enter low risk trades.