Thread: Elliott Wave Trading Discussion

Hi everyone,

Possible triangle forming?

Friendly greetings,
Jeremy

Guys,

I was wondering what are the rules and how to look for the signs for a possible end of Wave-ii ?

How can you be sure that the Wave-ii has finished at 38.2% or would it continue towards 50% or even 61.8% retracement ...

Thanks,
Asher

Originally Posted by asherewt

Guys,

I was wondering what are the rules and how to look for the signs for a possible end of Wave-ii ?

How can you be sure that the Wave-ii has finished at 38.2% or would it continue towards 50% or even 61.8% retracement ...

Thanks,
Asher

Hi Asher,

The only real rule is that wave 2 must end inside the wave 1 territory, so if wave 1 is a wave up, wave 2 cannot go below the start of wave 1. Wave 2 is a corrective wave, so it should be a flat, zigzag, double zigzag, double three (WXY) formation. In extremly rare cases it can be a triangle, but it's better not to count it like one, it's too rare.
As for the retracement, wave 2 usually retraces around 61.8%. For me, anywhere between 50% and 99.9% is realistic. Once in this zone, i start looking for other signs like candlestick formations, trendline breaks, indicators... It's important to understand the idea behind a wave 2. Wave 1 is a start of a new trend. In wave 2, the nonbelievers think the previous trend is still intact and try to push price to a new high/low. Sometimes the nonbelievers are strong and push the price back far enough to make a double top/bottom without making a new high/low. In other cases they are weak and price only makes it to the 38.2% retracement. When wave 3 starts, almost everyone knows there's a new trend and price continues faster in the direction of the new trend.

Hope it helps.

Jeremy

Thanks Jermy,

I myslef use Ichimoku Cloud Patterns (on MTF) as the confirmation and most of the times they work right.

BTW, the reason I asked this question is because I'm looking for a Longer Term Entry int BARCLAYS (FTSE) but I'm just not sure whether the Wave-ii has already finished or not ...

Originally Posted by Jeremy Demunter

Hi Asher,

The only real rule is that wave 2 must end inside the wave 1 territory, so if wave 1 is a wave up, wave 2 cannot go below the start of wave 1. Wave 2 is a corrective wave, so it should be a flat, zigzag, double zigzag, double three (WXY) formation. In extremly rare cases it can be a triangle, but it's better not to count it like one, it's too rare.
As for the retracement, wave 2 usually retraces around 61.8%. For me, anywhere between 50% and 99.9% is realistic. Once in this zone, i start looking for other signs like candlestick formations, trendline breaks, indicators... It's important to understand the idea behind a wave 2. Wave 1 is a start of a new trend. In wave 2, the nonbelievers think the previous trend is still intact and try to push price to a new high/low. Sometimes the nonbelievers are strong and push the price back far enough to make a double top/bottom without making a new high/low. In other cases they are weak and price only makes it to the 38.2% retracement. When wave 3 starts, almost everyone knows there's a new trend and price continues faster in the direction of the new trend.

Hope it helps.

Jeremy

Originally Posted by Jeremy Demunter

Hi Asher,

The only real rule is that wave 2 must end inside the wave 1 territory, so if wave 1 is a wave up, wave 2 cannot go below the start of wave 1. Wave 2 is a corrective wave, so it should be a flat, zigzag, double zigzag, double three (WXY) formation. In extremly rare cases it can be a triangle, but it's better not to count it like one, it's too rare.
As for the retracement, wave 2 usually retraces around 61.8%. For me, anywhere between 50% and 99.9% is realistic. Once in this zone, i start looking for other signs like candlestick formations, trendline breaks, indicators... It's important to understand the idea behind a wave 2. Wave 1 is a start of a new trend. In wave 2, the nonbelievers think the previous trend is still intact and try to push price to a new high/low. Sometimes the nonbelievers are strong and push the price back far enough to make a double top/bottom without making a new high/low. In other cases they are weak and price only makes it to the 38.2% retracement. When wave 3 starts, almost everyone knows there's a new trend and price continues faster in the direction of the new trend.

Hope it helps.

Jeremy

Jeremy, I love how you put this in plain English. That's awesome and I think will help many of the newer traders that want to learn Elliott Wave. Thanks for all of those insights. Awesome job!

Interesting move on EURUSD during the assian session... Maybe something like this:

Correlated to EURUSD - USDCHF...

the SP continues to be the most irrational market in the world.
after managing with my incredible skills to sell the lowest tick it stopped me out for a -17 point loss.. thats what you get for markets you dont know very well. i will wait for any confirmation of a new decline, or a topping pattern before doing anything again. i still believe it shall not reach much further then 1150-160, so lets be patient here...

on the other hand, those two positions have been going rather well as forecasted.. still running..

Originally Posted by asherewt

Guys,

I was wondering what are the rules and how to look for the signs for a possible end of Wave-ii ?

How can you be sure that the Wave-ii has finished at 38.2% or would it continue towards 50% or even 61.8% retracement ...

Thanks,
Asher

If you want to know about the end of Wave 2 then you really are or planning
to become an Elliott Wave Technician. Try to work with Elliott Wave in its
own method which is wave count.

There is much unnecessary hard work when you leave that purity. Also there
is a simpler way to count when you stick to 12345ABC.

The rest were just workarounds for a problem which has been solved
with the New Elliott Wave Rule. The original Elliott Wave Rules became
loaded down as the problem of simple counting was left behind.

Cheers,
Cyclon

Hi Cyclon and welcome to the DailyFX forum,

Thanks for your advise, I'll remember that. However, I've had no intention to become a Technician ... I'm just trying to keep things simple and trying to find good entry points.

Thanks again.
Asher

Originally Posted by Cyclon

If you want to know about the end of Wave 2 then you really are or planning
to become an Elliott Wave Technician. Try to work with Elliott Wave in its
own method which is wave count.

There is much unnecessary hard work when you leave that purity. Also there
is a simpler way to count when you stick to 12345ABC.

The rest were just workarounds for a problem which has been solved
with the New Elliott Wave Rule. The original Elliott Wave Rules became
loaded down as the problem of simple counting was left behind.

Cheers,
Cyclon

Still in channel... Looks like possible A=C.

Originally Posted by asherewt

Hi Cyclon and welcome to the DailyFX forum,

Thanks for your advise, I'll remember that. However, I've had no intention to become a Technician ... I'm just trying to keep things simple and trying to find good entry points.

Thanks again.
Asher

Of Course - that is what we all want. Thanks for the welcome.

I think that was the main point of what I was saying.

I got a kick out of what you said about not wanting to become
a technician.

Seems you may already be further down that slippery slope - careful.

Cheers,
Cyclon

although i am very bearish on the eurchf, the recent developments turn me short term bullish. 1,50 has not been retested, so it could be time for an upside attempt which would be the final chance to cash out for any bulls (thats why the limit order is there). that doesnt mean i cant exit earlier, but since the chart is based on 1h candles, and betting on an A-B-C time harmony, if i am right there seems to be plenty of time for this to play out.

interestingly yesterday rumors about the SNB intervening once again hit the market psychology, and this could have an positive effect on this trade in the middle-term.

last but not least, 35 pips is a small price to pay for a ticket which can bring you 100/200+..

Hi asherewt, usually wave 2 is deep and retraces between 50% and 100%, but this is not a rule so it could retrace 38.2%. On the graph provided later, I think I can count 3 waves down. According to that, I think we could see a flat of which A is ended and are waiting for B and C, finishing around the end of A, and previous wave 4. Another possibility is we could expect an X and a new zigzag, for a final deep double zigzag. With respect to the corrective formation, the only one that you won't see as a wave 2 is a triangle, but a it could be a part of that wave 2. Sorry for my english. Hope it helps.

Originally Posted by asherewt

Thanks Jermy,

I myslef use Ichimoku Cloud Patterns (on MTF) as the confirmation and most of the times they work right.

BTW, the reason I asked this question is because I'm looking for a Longer Term Entry int BARCLAYS (FTSE) but I'm just not sure whether the Wave-ii has already finished or not ...