Trading Chaos Part 4 | Elliott Waves

2021年10月20日

Hello, everyone!

Today we are going to spot the most important and challenging part of Trading Chaos by Bill Williams(BW) – the Elliott waves. This analysis is the most efficient in combination with other techniques of Trading Chaos. Market always moves with the waves and BW developed the conception which eliminate the uncertainty of Elliott Waves. In this article we will consider every wave and explain how to spot their target areas.

First of all we need to understand the 5 “magic bullets” which kill the trend. They are:

Divergence with the Oscillator
Target zone
The squat bar at the one of three top bars
Fractal at the top
Momentum change
Today we are goin to consider only the target zone. Other tools we will reveal in the next articles about Trading Chaos.

How to spot Wave 1 start?

Research the last wave from the previous trend. This should be wave 5 or c. This last wave have the typical structure of waves with less scale. You can use the technique for Wave 5 end defining to spot when trend is finished.

How to spot Wave 1 end?

Search the 5-waves structure inside the Wave 1. You also should spot the 5-th wave end. Use the 5 “magic bullets” which usually kill the trend.

2021年10月20日

ノート

2021年10月20日

ノート

Wave 2 is the corrective wave which is caused by the new sells by traders who believe that the downtrend is not finished yet. They suppose that Wave 1 is still correction for the downtrend.

How to spot the Wave 2 end?

The Wave 2 usually ends in the target zone: 38%-62% of Fibonacci retracement for Wave 1.There is only 15% probability that the Wave to ends below the 62%. If this wave ends above 38% it calls wrong correction(we will spot it next time).

2021年10月20日

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How to spot Wave 3 end?

The most impulsive wave, usually supported by the huge volume. Target zone for this wave is 1 – 1.62 of the Fibonacci extension for Wave 1. Also use other “magic bullets”.

2021年10月20日

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How to spot Wave 4?

In Wave 4 traders usually take profits and this is it’s cause. Wave 4 is usually the longest wave in terms of time. Market
is very boring, low volatile and have a lot of manipulations. The target zone is 38%-50% of the Wave 3. Research the Wave c which is included by the current Wave 4 to spot it’s end. Use 5 “magic bullets” to spot Wave c and, correspondingly Wave 4 end.

2021年10月20日

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How to spot Wave 5 end?

Measure the price range between Wave 1 start and Wave 3 end, take 62% and measure out from Wave 4 end.
This is Wave 5 target zone. Also use “magic bullets” to confirm your analysis.


Next time we will consider the types of corrections and after that we are able to learn the advanced techniques for waves identifying.

DISCLAMER: Information is provided only for educational purposes. Do your own study before taking any actions or decisions at the real market.