These guidelines can be used with classic and modern Elliott Wave analysis and also with the Elliott Oscillator in a bar chart of from 100 – 150 bars from Point Zero. CONDITIONS A coincidence of Pattern, Price and Time has come together to mark a major pivot that we have identified elliott waves theory 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. 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.
Will follow either a three wave A-B-C or a five wave impulse pattern. 1 that follows an A-B-C is an impulse wave. 1 that follows a five wave pattern is W. Modern Elliott Wave analysis allows for five wave triangle patterns in the W. 1 position of lesser degree waves. 1:1 without invalidating the pattern as an impulse wave.
1 triangles are never allowed as lesser degree waves within a larger degree W. 1 of the same degree should overbalance the immediately prior corrective pattern in price range but not necessarily in time. Use internal swings of lesser degree to project termination of W. 1 usually overbalances in time the prior counter trend swing. 2 position and most likely in W. 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. Usually the longest and strongest trending wave of the sequence. 3 cannot be the shortest wave of a five wave sequence. 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.