Elliot Wave Pattern
You
already know about Elliot 5-wave and 7-wave patterns. I just add few important
point regarding it,..
- Capture 3rd wave using 123-setup in trending market or breakout after strong building up.
- Most continuation pattern form between MA's.
- wave 3 is long & wave 1=wave 5 or vice versa.
- extension can happen in any impulse.
- Flat(23%-38%)/deep(50%-62%) = wave 2/wave 4 vice versa.
- common continuation patterns such as triangle, wedge, pendant, flag, W, M, range
- wave pattern in past - stock reverses at major S/R line like past
- 42.7 percent of all statistics are made up on the spot.
- Only take 38.2 or 50 % retracements.
- Avoid position in wave 1 due to risk of range formation.
- Volatility is great at turning point (Exhaustion Wave). Volatility increases in the early phase of the trend, decreases in the middle and peaks at the end.
- Tops are formed quicker & more volatile than bottom. Bottoms take longer to form.
- Declines from tops tend to be more vertical than rises off bottoms.
- Volatility, bar width, and volume all decline as a range bound market nears its conclusion.
- Positive feedback(trend) in most markets tends to occur during the volatile first and last hours while negative feedback(range) can persist throughout the rest of the day. Due to major volume order by institution and banks occur at opening and closing. whereas retail professional players do intraday trading at middle of day.
- Never chase entry in selloff. they are fast.
- Selloff can go in low volume for long time.
- Breakaway/exhaustion gap has strong volume. continuation gap medium-strong volume.
- Exhaustion gap get filled. breakaway and continuation gap may never fill.
Frequently seen continuation pattern
Triangles
- normally triggers on third rise to top
- volume gets dry up
- mostly triangle form between 50MA - 100MA
- they arise during high volatility (large bars)
- mostly wave 4 = triangle followed by gap tells climax
- sharp breakout at triangles often predict the climax of entire bull rally
- can also be B correction
- each triangle wave is related next wave triangle by 0.618%
Few
of the major correction patterns are
