Elliott Wave Theory | Rules | Guidelines | Principles


Elliott Wave Theory – I take the first step to study wave analysis and what the term wave means the wave is the basic concept of wave analysis.

And the whole market consists of waves from the tick and minutes charts to the higher of timeframes a wave is a section of price movement from one change of direction to another.

elliot wave principle

The definition of a wave, we can say that from the beginning of the trend to the first point of trend breaking.

Here we have five waves labelled by numbers 1,2,3,4,5. (Impulse Waves)

And then three waves labelled by letters A, B, C. (Corrective Waves)

Elliott Wave Theory And Actionary and Reactionary. 

Actionary wave

An actionary wave is a wave that develops in the same direction as the primary wave and hereinabove pictures red colour shows actionary wave that is move-in same direction as the fundamental wave.

In this above example, we see that our five waves make up one big wave which we call the primary stream or the main trend.

In other words, the primary trend is a wave one level higher compared to small waves.

The primary trend directs upwards so all its sub-waves that also look up our actionary wave.

Reactionary wave

The reactionary waves are those waves that are looking in the direction opposing the primary trend on an uptrend.

All reactionary waves look down here they are on a downtrend it’s precisely the opposite all actionary waves are looking down that is in the direction of the primary trend.

And reactionary waves lookup that is against this and I think now everyone who has read this the post will be able to understand which waves in the trend are actionary and reactionary.

Continued till Next Class.

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About Muhammad Shahid

My name is Muhammad Shahid, MBA in Finance from IBA, University of Sindh, Professional Forex Trader & Trainer, I have taught more than 850 Students throughout the Sindh.

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