Hello, friends! I would like to briefly talk to you regarding Elliott Wave Theory and how we can use it to our advantage.
Brief history and intro:
Ralph Nelson Elliott concluded that the movement of the market could be predicted by observing and identifying a repetitive pattern of waves. Elliott first published his theory in the book titled The Wave Principle in 1938. Elliott was able to analyze markets in greater depth, identifying the specific characteristics of wave patterns and making detailed market predictions based on the patterns.
Basic Principles Elliott Wave Theory:
Movement in the direction of the trend is unfolding in 5 waves (called motive wave) while any correction against the trend is in three waves (called corrective wave). The movement in the direction of the trend is labeled as 1, 2, 3, 4, and 5. The three-wave correction is labeled as a, b, and c. These patterns can be seen in long-term as well as short-term charts.
An example:
Elliott Waves are like a piece of broccoli, where the smaller piece, if broken off from the bigger piece, does, in fact, look like the big piece.
Market prices alternate between an impulsive, or motive phase, and a corrective phase on all time scales of trend. Impulses are always subdivided into a set of 5 lower-degree waves, alternating again between motive and corrective character, so that waves 1, 3, and 5 are impulses, and waves 2 and 4 are smaller retraces of waves 1 and 3. Corrective waves subdivide into 3 smaller-degree waves, denoted as ABC. Corrective waves start with a five-wave counter-trend impulse (wave A), a retrace (wave B), and another impulse (wave C). The 3 waves A, B, and C make up a larger degree corrective wave (2). An impulse-wave formation, followed by a corrective wave, forms an Elliott wave degree consisting of trends and countertrends. In a bear market, the dominant trend is downward, so the pattern is reversed—five waves down and three up.
Elliott identified nine degrees of waves, which he labeled as follows, from largest to smallest:
-Grand Super Cycle
-Super Cycle
-Cycle
-Primary
-Intermediate
-Minor
-Minute
-Minuette
-Sub-Minuette
Since Elliott waves are fractal, wave degrees theoretically expand ever-larger and ever-smaller beyond those listed above. Simply because the market is a fractal does not make the market easily predictable. Scientists recognize a tree as a fractal, but that doesn’t mean anyone can predict the path of each of its branches.
Now that being said we can conclude that ETH has completed supercycle and intermediate wave 2. The next wave will be wave 3.
Wave 3 must be an impulse wave, cannot be the shortest of 1,3 & 5. Wave three is usually the largest and most powerful wave in a trend. Prices rise quickly, corrections are short-lived and shallow.
Wave 3 rally picks up steam and takes the top of Wave 1. As soon as the Wave 1 high is exceeded, the stops are taken out.
Keep top resistances in mind.
This is not financial advice, always do your own research before investing in any stocks or cryptocurrencies.
Brief history and intro:
Ralph Nelson Elliott concluded that the movement of the market could be predicted by observing and identifying a repetitive pattern of waves. Elliott first published his theory in the book titled The Wave Principle in 1938. Elliott was able to analyze markets in greater depth, identifying the specific characteristics of wave patterns and making detailed market predictions based on the patterns.
Basic Principles Elliott Wave Theory:
Movement in the direction of the trend is unfolding in 5 waves (called motive wave) while any correction against the trend is in three waves (called corrective wave). The movement in the direction of the trend is labeled as 1, 2, 3, 4, and 5. The three-wave correction is labeled as a, b, and c. These patterns can be seen in long-term as well as short-term charts.
An example:
Elliott Waves are like a piece of broccoli, where the smaller piece, if broken off from the bigger piece, does, in fact, look like the big piece.
Market prices alternate between an impulsive, or motive phase, and a corrective phase on all time scales of trend. Impulses are always subdivided into a set of 5 lower-degree waves, alternating again between motive and corrective character, so that waves 1, 3, and 5 are impulses, and waves 2 and 4 are smaller retraces of waves 1 and 3. Corrective waves subdivide into 3 smaller-degree waves, denoted as ABC. Corrective waves start with a five-wave counter-trend impulse (wave A), a retrace (wave B), and another impulse (wave C). The 3 waves A, B, and C make up a larger degree corrective wave (2). An impulse-wave formation, followed by a corrective wave, forms an Elliott wave degree consisting of trends and countertrends. In a bear market, the dominant trend is downward, so the pattern is reversed—five waves down and three up.
Elliott identified nine degrees of waves, which he labeled as follows, from largest to smallest:
-Grand Super Cycle
-Super Cycle
-Cycle
-Primary
-Intermediate
-Minor
-Minute
-Minuette
-Sub-Minuette
Since Elliott waves are fractal, wave degrees theoretically expand ever-larger and ever-smaller beyond those listed above. Simply because the market is a fractal does not make the market easily predictable. Scientists recognize a tree as a fractal, but that doesn’t mean anyone can predict the path of each of its branches.
Now that being said we can conclude that ETH has completed supercycle and intermediate wave 2. The next wave will be wave 3.
Wave 3 must be an impulse wave, cannot be the shortest of 1,3 & 5. Wave three is usually the largest and most powerful wave in a trend. Prices rise quickly, corrections are short-lived and shallow.
Wave 3 rally picks up steam and takes the top of Wave 1. As soon as the Wave 1 high is exceeded, the stops are taken out.
Keep top resistances in mind.
This is not financial advice, always do your own research before investing in any stocks or cryptocurrencies.