How To Trade Elliott Waves & ABC Correction Waves
Elliott wave analysts hold that each individual wave has its own signature or characteristic, which typically reflects psychology of moment . Understanding those personalities is a key to the application of the Wave Principle; they are defined as follows:
Five wave pattern - dominant trend (Bullish):
Wave 1: Wave one is rarely obvious at its inception. When the first wave of a new bull market begins, the fundamental news is almost universally negative.
Wave 2: Wave two corrects wave one, but can never extend beyond the starting point of wave one.
Wave 3: Wave three is usually the largest and most powerful wave in a trend.
Wave 4: Wave four is typically clearly corrective.
Wave 5: Wave five is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average retail traders finally buy in, right before the top.
Three wave pattern - corrective trend (Bearish):
Wave A: Corrections are typically harder to identify than impulse moves. In wave A of a bear market, the fundamental news is usually still positive.
Wave B: Prices reverse higher, which many see as a resumption of the now long-gone bull market. Those familiar with classical technical analysis may see the peak as the right shoulder of a head and shoulders reversal pattern.
Wave C: Prices move impulsively lower in five waves. Volume picks up, and by the third leg of wave C, almost everyone realizes that a bear market is firmly entrenched. Wave C is typically at least as large as wave A and often extends to 1.618 times wave A or beyond.
Note: Where is PA on EurCad pair going next week? look at weekly and monthly charts (all time lows)? Making doji or undecided candles? Head & Shoulder pattern? Continue bearish...Are you using Fib retracement tool? golden zone 61.8%. ... or Friday daily doiji- why not trade price action in which ever way breaks this? Good luck.
Five wave pattern - dominant trend (Bullish):
Wave 1: Wave one is rarely obvious at its inception. When the first wave of a new bull market begins, the fundamental news is almost universally negative.
Wave 2: Wave two corrects wave one, but can never extend beyond the starting point of wave one.
Wave 3: Wave three is usually the largest and most powerful wave in a trend.
Wave 4: Wave four is typically clearly corrective.
Wave 5: Wave five is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average retail traders finally buy in, right before the top.
Three wave pattern - corrective trend (Bearish):
Wave A: Corrections are typically harder to identify than impulse moves. In wave A of a bear market, the fundamental news is usually still positive.
Wave B: Prices reverse higher, which many see as a resumption of the now long-gone bull market. Those familiar with classical technical analysis may see the peak as the right shoulder of a head and shoulders reversal pattern.
Wave C: Prices move impulsively lower in five waves. Volume picks up, and by the third leg of wave C, almost everyone realizes that a bear market is firmly entrenched. Wave C is typically at least as large as wave A and often extends to 1.618 times wave A or beyond.
Note: Where is PA on EurCad pair going next week? look at weekly and monthly charts (all time lows)? Making doji or undecided candles? Head & Shoulder pattern? Continue bearish...Are you using Fib retracement tool? golden zone 61.8%. ... or Friday daily doiji- why not trade price action in which ever way breaks this? Good luck.