surangadesilva
Education

5 STEPS TO CHANNEL THE TARGET WAVE 5 USING ELLIOTT WAVES

BITSTAMP:BTCUSD   Bitcoin / U.S. Dollar
STEP 1 - Once the 1 wave is completed use Fib Retracement to find out the possible wave 2 level. Usually wave 2 is 0.5 - 0.8 of wave 1. In a uptrend Fib level is close to 0.8 but its the opposite on downtrend

STEP 2- Once the wave 2 is completed use Fib Extension to find out the possible wave 3 level. Usually wave 3 is 1.618 of wave 1 or 2.618 of wave 2.

STEP 3 - Once the wave 3 is completed then you can draw a line to join 1 and 3 and then draw a parallel line on wave 2 to project the wave 4. Usually wave 4 is 0.5 - 0.618 of wave 3

STEP 4 - Once wave 4 is completed then you can draw a line to join wave 2 and 4 and then remove the previously drawn line joining wave 1 and 3

STEP 5 - Then draw a parallel lines from wave 1 and 3 and the 50% trend line of the above parallel lines to project wave 5. Usually wave 5 is 1 or 0.618 of wave 1


Hi surangadesilva, can you clarify something for me please- I am stuck on Step 3, the projection of Wave 4.
I drew a line, A, from 1-3 and placed a parallel line on 2. How do you use that line?
I tried a few different ways and found that a line exactly the same length as the line from 1-2, and parallel to it, lands within the 0.5 - 0.618 zone for 4. But I am not 100% sure this was the intention of the step?
Reply
@iguana10, When you draw a parallel line on wave 2 that provides the initial wave 4 boundary and you need to wait until wave 4 completes to join wave 2 and 4 to redraw the parallel lines on wave a and 3 and the middle line to project wave 5. So doing this will help to find when the wave 4 retrace back but you can use the fibo 0.5 - 0.618 to find the zone of wave 4.

See more info from the training video i have used: https://snag.gy/MzjubK.jpg

And more info here: http://countingpips.com/2016/09/how-to-draw-trend-lines-with-elliott-wave/ (note that their wave 5 channeling method doesn't include a middle line of wave 1 & 3)

Hope this helps
Reply
iguana10 surangadesilva
@surangadesilva, Thanks, everything you say and any references you provide will most definitely help. I appreciate your time. This is my very first serious step in my EW education and I know I have a long walk ahead.

I can't see yet what boundary this line is providing. After applying the fibo limits (and obviously the zone can't be any further 'West'- don't know the correct terminology yet- of the candle at Wave 3 end), there is only one boundary left to close of the rectangle where Wave 4 will end- the 'Eastern' most one.

Thanks again and I will more than likely be requesting to pick your brains many more times!
Reply
Acel iguana10
@iguana10, Its simple...

1) Use the channel tool
2) Use the 2 points to connect the end of wave 2 with the end of wave 4
3) use the 3rd point to the end of wave 1 so you search for wave 5 end

Usually the over-throw of the channel happens on wave 3 unless the structure meets some guideline that suggests the over throw will happen on the 5th wave ( for example underthrow of the second wave or sideways action of wave 4 of a lower degree near the top channel resistance)

Examples:

Reply
@Acel, Thanks for that, I am working my way through it all. A lot to wrap my head around! But you have done it and it is very impressive. Fascinating that there is the same ratio of our belly buttons to our height as there is in certain price retracements in financial markets.
Reply
Acel iguana10
@iguana10, indeed, but dont search for perfection in the markets.
Reply
@Acel, No mate, it would be impossible to find hey? Seeing as there is none in mass, averaged human emotional, psychological behaviour. Just patterns of probability, including Plan B's and C's. "Our" in my reference to belly button height being very general and collective, I don't get fixated on one thing. In fact nothing haha.
Reply
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