Elliott Wave Theory
Elliott wave topic, I will cover Elliot Waves with more details and some real-time examples.
Now the Elliott wave theory was discovered by Nelson Elliot and what he basically suggested that market moves up or down in recognizable patterns.
it gives these recognizable patterns and structures and he represented them in the form of waves.
And he found that the structural movements in the market happen in form of waves.
Predictive V / S Reactive
I have learned from my own experience is that every theory that you get in the market.
And these repetitive patterns take the shape of 8 times waves that is impulses waves and corrective waves.
5 waves are impulses waves and 3 waves are corrective waves.
Furthermore, keep in mind that these waves are not Forecasting tool or not any software but they only detailed description of the market. It is the only mass psychology of trend pattern.
So there are two types of a theory on is predictive theory or is a reactive theory.
and reactive theory is one which makes you follow the market where it goes.
The predictive theory is one which is some extent give you the probable future direction of the market trend of any currency pair.
As I mentioned in above picture that is five impulses waves.
and from them waves 1,3,5 shows effect direction of the market.
Waves 2, 4 are the counter move to wave 1,3,5.
So keep in mind that wave 2 never moves below wave 1.
Why that we consider this in mind actually wave never break support of wave 1.
While if it broke it means it does not start Elliott wave. Then and wave 3 is always longest by wave 1 and wave 2. and also wave 4 never break high of wave1. It means wave 4 never enters wave 1.
Dear students our topic will continue more in next post.