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L earn How Trade In F orex L ike A Pro with Elliot Wave By Malaysia F orex Training Centre Asia F x Traders
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CONTENTS
1.
2.
Trading with Elliott Waves, Strategy and Target. Trading System Buj a ng S ena ng
3.
Introduction Ralph Nelson Elliotts Discovery Motive Waves Corrective Waves Rules Guidelines Wave Personalities Fibonacci Relationships
1.01
Emotional (Unconscious) Subjective Impulsive Ignorance and Uncertainty Herding Values Cannot Revert To Anything
1.02
1.03
Crowd behavior trends and reverses in recognizable patterns, that he called waves. These structures link together to form larger versions of the same patterns and how those, in turn, become the building blocks for patterns of the next larger size and so on. In 1938, he coined this phenomenon The Wave Principle. Natures Law The Secret of the Universe
1.04
1.05
1.06
1.07
1.08
1.09
1.10
1.11
1.12
Predict Market Direction Identify turning Points Provide Guidance for Entering and Exiting Positions
1.14
MOTIVE WAVES
Five-wave structures, numbered 1-5 In the direction of the main trend of one larger degree Wave 2 cannot retrace more than 100% of wave 1 Wave 3 can never be the shortest and is often the longest
2.01
2.00
Diagonal Triangles
2.02
Wave 4 never enters the price territory of wave 1. Actionary waves 1, 3 and 5 are motive waves. Wave 3 is always an impulse wave.
2.03
2.04
2.05
2.06
2.08
Elongated impulse wave Appears in either wave 1, 3 or 5 Often seen in wave 3 for the stock market Often seen in wave 5 in commodities
2.09
2.10
2.11
2.12
2.13
2.14
Wave 5 does not exceed the end of wave 3 Contains necessary five subwaves Often occurs after a strong third wave
2.15
2.16
2.17
2.18
Wave 4 almost always moves into the price territory of wave 1 Waves 1, 3 and 5 are composed of three subwaves, not five Found at termination points of larger pattern, indicating exhaustion of larger pattern Normally has wedge shape within two converging lines
2.19
Diagonal Triangles
2.20
2.21
2.23
2.24
2.25
2.26
SUMMARY
The Wave Principle = Graphic of Mass Psychology Motive Waves = 5 Wave Structures, Main Trend of One Larger Degree Types of Motive Waves = Impulse, Diagonal Triangle Impulse: Waves 1, 3, 5 = 5 Impulse Subwaves (Extensions, Truncations) Wave 4 Price Territory of Wave 1 Diagonal Triangle: Waves 1, 3, 5 = 3 Subwaves Wave 4 = Price Territory of Wave 1 Signal = Imminent Major Trend Reversal
2.27
CORRECTIVE WAVES
Zigzag
3.01
3.00
3.02
Flat
3.03
3.04
Triangle
3.05
Horizontal Triangles
3.06
Running Triangles
3.08
3.09
3.11
3.12
Combination
3.13
Combination
3.14
3.15
3.16
3.17
B 3 3 3
C 5 5 3 X wave
Sideways Sideways
3.18
Rules
Of waves 1, 3 and 5, wave 3 can never be the shortest wave. Wave 2 can never retrace more than 100% of wave 1. The end of wave 4 can never overlap the orthodox end of wave 1. Strong Guideline
Rules
4.01
Rules
4.02
Rules
This five-wave move cannot be the start of a new trend. It can be wave C of a corrective pattern.
4.03
Rules
Significant Bottom
4.04
Rules
4.05
Rules
Wave 3 is never the shortest of waves 1, 3 and 5. This could be part of a wave 3 extension.
4.06
Rules
Significant Bottom
4.07
Rules
4.08
Rules
Wave 4 does not overlap the price territory of wave 1. This could be the start of a 3rd wave extension or an A-B-C correction.
4.09
Guidelines
5.00
Two of the motive waves in a five-wave sequence will tend toward equality in time and magnitude. This is generally true of the two non-extended waves. For example, if wave 3 is extended then waves 1 and 5 will tend toward equality.
5.01
Equality
5.02
Equality
5.03
If wave 2 is a sharp correction, expect wave 4 to be a sideways correction, and vice versa. Sharp corrections never include a new price extreme. Example: Zigzags Sideways corrections usually include a new price extreme. Examples: Flats, Triangles, and Combinations Diagonal triangles do not display alternation in subwaves 2 and 4.
5.04
5.05
5.06
5.07
5.08
5.09
If a correction begins with a flat a-b-c structure for wave A, then expect a zigzag a-b-c structure for wave B, and vice versa. If a large correction begins with a simple a-b-c zigzag for wave A, wave B will stretch out into a more complex a-b-c zigzag.
5.10
5.11
5.12
5.13
5.14
Zigzag 5-3-5
5.15
Corrections, especially when they are fourth waves, tend to register their maximum retracement within the span of travel of the previous fourth wave of one lesser degree and most commonly near its terminus.
5.16
5.17
5.18
5.19
Guidelines Channeling
A parallel trend channel typically marks the upper and lower boundaries of impulse waves and zigzag corrective waves.
5.20
5.21
5.22
5.23
5.24
5.25
5.26
5.27
5.28
5.29
5.30
5.31
Guidelines Throw-Over
5.32
Throw-Over
5.33
Guidelines Volume
Waves < Primary Degree Normally, 3rd wave volume > 5th wave volume 5th wave volume > 3rd wave volume = 5th wave extension Waves > Primary Degree Higher volume in 5th waves All-time high volume at terminal points in bull markets
Volume often spikes briefly at the throw-over point of a parallel trend channel line or a diagonal triangle resistance line. Volume contracts in corrective waves.
5.34
Volume
5.35
5.36
5.38
Summary
Two motive waves in a five wave sequence will tend toward equality. If the second wave is sharp, then the fourth wave is usually sideways, and vice versa. Corrective waves usually end in the span of the previous fourth wave of one lesser degree. Impulse waves tend to be bounded by a channel composed of two parallel lines. A throw-over/throw-under occurs when wave 5 terminates beyond the trend channel. The post-triangle thrust measurement estimates price target for the next wave in the pattern of one larger degree.
5.39
Wave Personality
6.00
Wave Personality
6.01
7.00
7.01
7.02
Retracements Multiples
7.03
Retracements
7.04
Retracements
7.05
Retracements
7.06
Retracements
7.07
Retracements
7.08
7.14
7.15
Summary
The Fibonacci Ratio (), an irrational number approximating .618, known as the Golden Ratio, is found in nature, human biology, human thought, and aggregate human behavior such as the stock market. The Wave Principle is a robust fractal governed by Fibonacci mathematics. Sharp wave corrections tend to retrace 61.8% or 50% of the previous wave. Sideways corrections tend to retrace 38.2% of the previous wave. Subdivisions of impulse waves tend to be related by Fibonacci numbers .618, 1.0, 1.618 and 2.618. Subdivisions of corrective waves tend to be related by Fibonacci numbers .382, .618, 1.0 and 1.618.
7.16
8.08
8.09
8.10
Throw-Over
8.11
Wave Personality
8.14
8.15
Retracements
8.16