I have never been able to identify Elliott Wave Patterns in real time. My impression is that there are always several scenarios at choice, and the correct one can only be identified with hindsight.
The Market Technicians Association CMT Level 2 Exam Requirements include the following
Frost, A.J. and Prechter, Robert R., Elliott Wave Principle, Tenth Edition, New Classics Library, Gainesville, GA c. 1978-2005, ISBN 0-932750-75-3
1. The Broad Concept
2. Guidelines of Wave Formation
3. Historical and Mathematical Background
4. Ratio Analysis and Fibonacci Time Sequences
So, the MTA does take the Elliott Wave Principle serious amd requires it for the preparation of the level 2 exam.
I have read that book, but did not help me to understand the labelling of waves. Could anybody help me out with this?
I attach a simple 60 min chart of ES below. How can this be understood in terms of Elliott wave counts?
The only thing I noticed, is that the first retracement showed a larger adverse excursion than the following retracements. This is in line with the uncertainty, after a bottom has formed. So I do understand that there is an accumulation period with larger retracements, followed by a trending period with smaller retracements. But how can this fit into a corset of numbering waves?
Last edited by Fat Tails; July 13th, 2010 at 05:06 PM.
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I can't get yours to fit, here is a schematic.
Super Simple Overview:
Basically, 5 wave patterns are Propagation waves, while 3's are corrections.
Just remember, 3 steps forward and 2 steps back. The end of Wave 1 is usually end of Wave 4.
Waves 1 ,3 and 5 usually made of 5 components, while 2 & 4 are usually 3 component, with one complex and one simple. Declines are the opposite of advances, with 3 downward propagation waves and 2 upward correction waves.
If you read BigMIke's Price Action thread he talks about interpretation. Well it is the same here, there is a lot of interpretation necessary, as well as some mental curve fitting, to make it work.
R.I.P. Andy Zektzer (ZTR), 1960-2010.
Please visit this thread for more information.
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Well. I have read and understood the Elliot book by Frost and Prechter. I could explain everything, which is written in there, but I cannot apply it to trading.
If you look at my chart above, what does it mean? Can you number the waves? Can you tell me, whether price will be up or down tomorrow? Or can anybody develop two alternating scenarios for tomorrow, so that I can validate one of them, when confirmed by price?
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Good Elliot Wave folks, always have two or even more interpretations of the past action; one typically bullish the other bearish. Each of these interpretations will have some projections, and some price levels which will validate or invalidate the count. I really wish we could code a simple EW projection system. There are rules to be followed but from that point onwards it should be fairly simple to project multiple interpretations.
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