Applying Elliott Wave Theory Profitably
Elliott wave principle describes forex market actions in conditions of recurrent price structures. Market cycle in order to applying Elliott wave theory are contained of two major types of wave : corrective wave and impulsive wave. For corrective wave , it is divided into 3 wave structure , this corrective wave named with wave a, b, and c. while for impulsive wave , it can be divided into 5 wave structure, and this impulsive wave named with wave 1,2,3,4,5.
Waves within Wave
An special characteristic of Elliott wave theory is that the are fractal. With fractal , market structure are made from the same patterns on a smaller or larger scales. therefore, with applying Elliott wave theory , we can count the wave on short term hourly forex time frame as well as long term yearly forex time frame chart.
Rules for applying Elliott wave theory profitably
There are several principles for valid count in Elliott wave trading.
1. Wave 2 should not reach below the wave 1
2. Wave 3 should not be the shortest wave
3. wave 4 should not overlap with wave 1
4. Wave 2 and 4 should unfold in two different wave forms.
Wave pattern in impulse wave
there are three types of elliott pattern in impulse wave
a. Wave 5 failure
Sometimes wave 5 is so weak than it can not pass the wave 3
b. Diagonal triangle at wave 5
Sometimes wave 5 is so weak that the wave 2 and wave 4 evolved into diagonal triangle and overlap with each other.
c. Extended wave
Only ont should unfolded into extended wave among wave 1, wave 3, and wave 5.
Wave pattern in corrective wave
1, flat pattern
2, double three pattern
3, zig zag pattern
4. Horizontal triangle pattern
5. Triple three pattern
6. Irregular pattern
All we have to do to applying Elliott wave theory profitably is to determine which wave form is moving to unfold in order to read the forex market fluctuations. Knowledge and experiences in wave count are important in order to applying Elliott wave theory
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Forex is simple follow the trend and you will rich.
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