教育

What are Elliot Waves ?

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⚡️Hello traders Today I will share with you an analysis method that large investors often apply and they have been very successful.

⚡️Elliott Wave is a technical tool used by investors in analyzing stock market prices, commodities, cryptocurrencies, etc.

⚡️Elliott waves analyze price movements and these movements tend to repeat and form waves. From previous historical trading data, based on the Elliott wave principle, investors can predict subsequent price fluctuations under the influence of market psychology.

⚡️The most complete and basic Elliott wave cycle when the market is bullish includes 8 waves and has a 2-phase structure. The first phase is an impulse wave with 5 wavelengths marked with numbers from 1 to 5, moving in the main trend. In which, waves 1, 3 and 5 are bullish waves and waves 2 and 4 are bearish waves.

⚡️The second phase is a correction wave with 3 wavelengths, moving against the main trend, marked with the letters A, B, C. In which, waves A, C are 2 down waves and one wave. B increases.

🎈NOTE🎈Every day we should learn a little bit, it will be easier to remember than cramming in a lot of knowledge and then not being able to apply it.

註釋

Wave 1:
⚡️ Wave one is rarely clear from its beginning. When the first wave of a new bull market begins, the fundamental news is mostly negative. The previous trend is considered to still be in strong force. Fundamental analysts continue to revise their earnings estimates lower; The economy may not look strong. Sentiment surveys are decidedly bearish, put options are in vogue, and implied volatility in the options market is high. Volume may increase a bit as prices move up, but not enough to alert some technical analysts.

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註釋

⚡️Wave 2: Wave 2 corrects wave 1, but can never extend beyond the starting point of wave 1. Usually, the news remains bad. As prices retested their previous lows, "bear" sentiment quickly built again, and the "crowd" arrogantly reminded all that the bear market was still very much in place. However, some positive signs appear for those looking: volume in wave 2 is lower than in wave 1, price generally does not retrace more than 61.8% (see Fibonacci section below) of the gain of wave 1, and the price will fall in a three-wave pattern.

註釋

⚡️ Wave 3: Wave 3 is usually the largest and strongest wave in a trend (although some research shows that in commodity markets, wave 5 is the largest). The news is now positive and fundamental analysts are starting to raise earnings estimates. Prices rise quickly, and adjustments are short and shallow. Anyone searching for "get on the pull back" is likely to miss the boat. When wave 3 begins, the news is probably still bearish, and most market players are still negative; but by the midpoint of wave 3, the "crowd" will regularly join the new uptrend. Wave 3 usually extends wave 1 at a ratio of 1.618:1.

註釋

⚡️ Wave 4: Wave 4 usually corrects clearly. Prices can meander sideways for a long time, and wave 4 usually retraces less than 38.2% of wave 3. Volume is lower than wave 3. This is a good place to buy a pullback if you understand the potential ahead for wave 5. However, waves 4 are often discouraging because of their lack of progress in the trend bigger position.

註釋

⚡️Wave 5: Wave 5 is the last leg in the direction of the dominant trend. The news is mostly positive and everyone is bullish. Unfortunately, this is when many average investors buy last, just before the peak. Volume in wave 5 is generally lower than in wave 3, and many indicators have begun to show divergence. At the end of a major bull market, the bears can be very taunting

註釋

ABC correction wave