Download Elliott Wave Rules&Guidelines PDF

TitleElliott Wave Rules&Guidelines
File Size310.2 KB
Total Pages10
Table of Contents
                            WAVE
	POINT ZERO
CONDITIONS
IMPLICATIONS
FIBONACCI
	W.1
	W.2
	W.3
	W.4
	W.5
	W.A
	W.B
	W.C
                        
Document Text Contents
Page 7

WAVE

POINT
Z
E
R
O

CONDITIONS
A coincidence of Pattern,
Price and Time has come
together to mark a major
pivot that we have
identified as the 5th of a 5th

wave. The Elliott Wave
pattern may not always be
the one that we were
expecting. When a fractal
occurs it means that a
wave has ended, ready or
not.

IMPLICATIONS
The suspected high or low
tick at a major pivot point
is the ideal entry point.
This entry has the least
capital risk because it is
closest to the initial stop
loss point - the pivot. The
trade off is that there will
be a higher percentage of
losses. The market does
not always reverse where
we want it to! The pivot
point is Point Zero.

FIBONACCI
The most common
Fibonacci
relationships between
Elliott waves of the
same degree.

W.1
Will follow either a three
wave A-B-C or a five
wave impulse pattern.
W.1 that follows an A-B-C
is an impulse wave. W.1
that follows a five wave
pattern is W.A of an A-B-
C pattern.

Modern Elliott Wave
analysis allows for five
wave triangle patterns in
the W.1 position of lesser
degree waves. That
means that W.4:1 can
overlap W.1:1 without
invalidating the pattern as
an impulse wave. The
internal structure is 3-3-3-
3-3.

W.1 triangles are never
allowed as lesser degree
waves within a larger
degree W.3.

New W.1 of the same
degree should
overbalance the
immediately prior
corrective pattern in price
range but not necessarily
in time.

PRICE
Use internal swings
of lesser degree to
project termination of
W.1

TIME
Impulse W.1 usually
overbalances in time
the prior counter
trend swing.

Page 8

W.2
Zig-Zag (ABC) most
common.

Triangles least likely in
W.2 position and most
likely in W.4.

W.2 most likely to be more
than 50% in time of W.1.
Avoid premature entry.
Patience required.

Wait for C wave
completion. The first
counterswing is likely just
the A leg of an ABC
pattern.

Must not penetrate Point
Zero or suspected change
in trend from Point Zero is
probably wrong.

PRICE
> 50% < 78.6% W.1

TIME
> 50% W.1 minimum
> 62% < 162% of
W.1 most likely

W.3
Usually the longest and
strongest trending wave of
the sequence.

W.3 cannot be the
shortest wave of a five
wave sequence. W.3 does
not have to be longest
wave but it can never be
the shortest. This is one of
the very few Rules of
Elliott Wave analysis.

W.3 always synchronizes
with an Oscillator
extreme. The Oscillator
extreme usually occurs
before the price extreme.

W.3 confirmed when the
price extreme of W.1 is
exceeded. Price should
not come back and trade
beyond the beginning of
W.2.

If suspected W.3
completes five waves of
lesser degree and is less
than 100% of W.1
considers that the
suspected W.3 is W.C of a
corrective pattern and not
an impulse wave.

Once W.3 exceeds 100%
of W.1 look for price to
reach and probably
exceed 162% of W.1

Look for termination
conditions when W.3
exceeds 262% expansion
of W.1 or 424%
retracement of W.2

PRICE
W.3 162% - 262% of
W.1

W.3 162% - 262% of
W.2

TIME
W.3 almost always
longer in time than
W.1

W.3 often equal in
time to complete W.0
through W.2
sequence.

Page 9

W.4
If W.2 was an ABC then
W.4 will probably be
complex and vica versa.
This is the principle of
alternation.

Look for minimum of three
fractals in lower time
frame and minimum price
relationship of 62% to W.2

W.4 should not penetrate
W.1. A W.4 close into W.1
invalidates the W.5 setup.
This is a Rule.

Price extreme often
occurs before the
termination of the W.4
pattern. In complex waves
Time factors should be the
primary consideration.

If Wave 4 has exceed
>50% of Wave 3, the
possibility of a 5th wave
failure is increased.

The Oscillator will cross
the zero line two times
during W.4. First against
the direction of W.3 and
then in the direction of
W.3 to signal that W.4 has
fulfilled minimum
requirements for
completion.

PRICE
< 50% of W.3
W.4 38% W.3
common
W.4:W.3 < W.2:W1
on percentage basis
W.4 62% 100%
162% W.2
W.4 > 23.6% < 50%
W.0 - W.3

TIME
W.4 most often
related to W.3 or W.0
- W.3
Often longer in time
than W.3 / W.0 - W.3
W.4 138% - 162% of
Parallel Projection of
ends of W.1 - W.3
measured from
beginning of W.2

W.5
Look for termination when
W.5 has completed at
least five fractals in lower
time frame and is in a
coincidence of Price and
Time.

W.5 has made new price
extreme and price and the
Oscillator are diverged.

When the extreme of
Wave 3 is exceeded the
maximum stop loss should
be raised to Wave 4.

When four fractals are in
place for Wave 5 trailing
stops should be moved
very close to the market.

If Wave 4 has exceed
>50% of Wave 3, the
possibility of a 5th wave
failure is increased.

PRICE
W.5 = 62% 100%
162% W.1
If W.3 extended W.5=
62% or 38% of W. 0-
3
W.5=127%, 162%,
200%, 262% W.4

TIME
W.5 > W.4 if W.4 is a
simple ABC
W.5 < W.4 if W.4 is
complex

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