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Fed Tightening Cycles & USD Performance

 
evanpattern
https://www.gold-pattern.com/, Egypt
Posts: 0
4 months ago
Feb 27, 2020 19:44
Channeling
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Elliott noted that a parallel trend channel typically marks the upper and lower boundaries of an impulse wave, often with dramatic precision. You should draw one as early as possible to assist in determining wave targets and provide clues to the future development of trends.
The initial channeling technique for an impulse requires at least three reference points. When wave three ends, connect the points labeled 1 and 3, then draw a parallel line touching the point labeled 2, as shown in Figure 2-8. This construction provides an estimated boundary for wave four. (In most cases, third waves travel far enough that the starting point is excluded from the final channel’s touch points.)

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If the fourth wave ends at a point not touching the parallel, you must reconstruct the channel in order to estimate the boundary for wave five. First connect the ends of waves two and four. If waves one and three are normal, the upper parallel most accurately forecasts the end of wave five when drawn touching the peak of wave three, as in Figure 2-9. If wave three is abnormally strong, almost vertical, then a parallel drawn from its top may be too high. Experience has shown that a parallel to the baseline that touches the top of wave one is then more useful, as in our depiction of gold bullion from August 1976 to March 1977 (see Figure 6-12). In some cases, it may be useful to draw both potential upper boundary lines to alert you to be especially attentive to the wave count and volume characteristics at those levels and then take appropriate action as the wave count warrants.

Figure 2-8

Figure 2-9
Always remember that all degrees of trend are operating at the same time. Sometimes, for instance, a fifth wave of Intermediate degree within a fifth wave of Primary degree will end when it reaches the upper channel lines at both degrees simultaneously. Or sometimes a throw-over at Supercycle degree will terminate precisely when prices reach the upper line of the channel at Cycle degree.
Zigzag corrections often form channels with four touch points. One line connects the starting point of wave A and then end of wave B; the other line touches the end of wave A and end of wave C. Once the former line is established, a parallel line drawn from the end of wave A is an excellent tool for recognizing the exact end of the entire correction.
Throw-over
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Within a parallel channel or the converging lines of a diagonal, if a fifth wave approaches its upper trendline on declining volume, it is an indication that the end of the wave will meet or fall short of it. If volume is heavy as the fifth wave approaches its upper trendline, it indicates a possible penetration of the upper line, which Elliott called a "throw-over." Near the point of throw-over, a fourth wave of small degree may trend sideways immediately below the parallel, allowing the fifth then to break it in a final burst of volume.
A throw-over is occasionally telegraphed by a preceding "throw-under," either by wave 4 or by wave two of 5, as suggested by the drawing shown as Figure 2-10, from Elliott’s book, The Wave Principle. A throw-over is confirmed by an immediate reversal back below the line. A throw-over can also occur, with the same characteristics, in a declining market. Elliott correctly warned that a throw-over at large degree causes difficulty in identifying the waves of smaller degree during the throw-over, as smaller degree channels are sometimes penetrated on the upside during the final fifth wave. Figures 1-17, 1-19 and 2-11 show real-life examples of throw-overs.

Figure 2-10
Scale
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Elliott contended that the necessity of channeling on semilog scale indicated the presence of inflation. To date, no student of the Wave Principle has questioned this assumption, which is demonstrably incorrect. Some of the differences apparent to Elliott may have been due to differences in the degree of waves that he was plotting, since the larger the degree, the more necessary a semilog scale usually becomes. On the other hand, the virtually perfect channels that were formed by the 1921-1929 market on semilog scale (see Figure 2-11) and the 1932-1937 market on arithmetic scale (see Figure 2-12) indicate that waves of the same degree will form the correct Elliott trend channel only when plotted selectively on the appropriate scale. On arithmetic scale, the 1920s bull market accelerates beyond the upper boundary, while on semilog scale the 1930s bull market falls far short of the upper boundary.

Figure 2-11 Figure 2-12
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Regarding Elliott’s contention concerning inflation, we note that the period of the 1920s actually accompanied mild deflation, as the Consumer Price Index declined an average of .5% per year, while the period from 1933 to 1937 was mildly inflationary, accompanying a rise in the CPI of 2.2% per year. This monetary background convinces us that inflation is not the reason behind the necessity for use of semilog scale. In fact, aside from this difference in channeling, these two waves of Cycle dimension are surprisingly similar: they create nearly the same multiples in price (six times and five times respectively), they both contain extended fifth waves, and the peak of the third wave is the same percentage gain above the bottom in each case. The essential difference between the two bull markets is the shape and time length of each individual subwave.
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At most, we can state that the necessity for semilog scale indicates a wave that is in the process of acceleration, for whatever mass psychological reasons. Given a single price objective and a specific length of time allotted, anyone can draw a satisfactory hypothetical Elliott wave channel from the same point of origin on both arithmetic and semilog scale by adjusting the slope of the 75 waves to fit. Thus, the question of whether to expect a parallel channel on arithmetic or semilog scale is still unresolved as far as developing a tenet on the subject. If the price development at any point does not fall neatly within two parallel lines on the scale you are using, switch to the other scale in order to observe the channel in correct perspective. To stay on top of all developments, you should always use both.



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Channeling
evanpattern
https://www.gold-pattern.com/, Egypt
Posts: 0
4 months ago
Feb 24, 2020 19:33
Elliott Wave Principle and Wave Equality

One of the guidelines of the Wave Principle is that two of the motive waves in a five-wave sequence will tend toward equality in time and magnitude. This is generally true of the two non-extended waves when one wave is an extension, and it is especially true if the third wave is the extension. If perfect equality is lacking, a .618 multiple is the next likely relationship (see Chapters 3 and 4).
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When waves are larger than Intermediate degree, the price relationships usually must be stated in percentage terms. Thus, within the entire extended Cycle wave advance from 1942 to 1966, we find that Primary wave ? traveled 120 points, a gain of 129%, in 49 months, while Primary wave ? traveled 438 points, a gain of 80% (.618 times the 129% gain), in 40 months (see Figure 5-5), far different from the 324% gain of the third Primary wave, which lasted 126 months.
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When waves are of Intermediate degree or below, the price equality can usually be stated in arithmetic terms, since the percentage lengths will also be nearly equivalent. Thus, in the year-end rally of 1976, we find that wave 1 traveled 35.24 points in 47 market hours while wave 5 traveled 34.40 points in 47 market hours. The guideline of equality is often extremely accurate.
Charting the Waves
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A. Hamilton Bolton always kept an "hourly close" chart, i.e., one showing the end-of-hour prices, as do the authors. Elliott himself certainly followed the same practice, since in The Wave Principle, he presents an hourly chart of stock prices from February 23 to March 31, 1938. Every Elliott wave practitioner, or anyone interested in the Wave Principle, will find it instructive and useful to plot the hourly fluctuations of the DJIA, which are published by The Wall Street Journal and Barron’s. It is a simple task that requires only a few minutes’ work a week. Bar charts are fine but can be misleading by revealing fluctuations that occur near the time changes for each bar but not those that occur within the time for the bar. Actual print figures must be used on all plots. The so-called "opening" and "theoretical intraday" figures published for the Dow averages are statistical inventions that do not reflect the averages at any particular moment. Respectively, these figures represent a sum of the opening prices, which can occur at different times, and of the daily highs or lows of each individual stock in the average regardless of the time of day each extreme occurs.

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The foremost aim of wave classification is to determine where prices are in the stock market’s progression. This exercise is easy as long as the wave counts are clear, as in fast-moving, emotional markets, particularly in impulse waves, when minor movements generally unfold in an uncomplicated manner. In these cases, short term charting is necessary to view all subdivisions. However, in lethargic or choppy markets, particularly in corrections, wave structures are more likely to be complex and slow to develop. In these cases, a longer term chart often effectively condenses the action into a form that clarifies the pattern in progress. With a proper reading of the Wave Principle, there are times when a sideways trend can be forecasted (for instance, for a fourth wave when wave two is a zigzag). Even when anticipated, though, complexity and lethargy are two of the most frustrating occurrences for the analyst. Nevertheless, they are part of the reality of the market and must be taken into account. The authors highly recommend that during such periods you take some time off from the market to enjoy the profits made during the rapidly unfolding impulse waves. You can’t "wish" the market into action; it isn’t listening. When the market rests, do the same.
The correct method for tracking the stock market is to use semilogarithmic chart paper, since the market’s history is sensibly related only on a percentage basis. The investor is concerned with percentage gain or loss, not the number of points traveled in a market average. For instance, ten points in the DJIA in 1980 meant a one percent move. In the early 1920s, ten points meant a ten percent move, quite a bit more important. For ease of charting, however, we suggest using semilog scale only for long term plots, where the difference is especially noticeable. Arithmetic scale is quite acceptable for tracking hourly waves since a 40 point rally with the DJIA at 800 is not much different in percentage terms from a 40 point rally with the DJIA at 900. Thus, channeling techniques work acceptably well on arithmetic scale with shorter term moves.
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Elliott Wave Principle and Wave Equality
freeforex
Central, Egypt
Posts: 0
4 months ago
Feb 21, 2020 11:54
Elliott Wave Principle and Combination (Double and Triple Three)

free forex signals Elliott called a sideways combination of two corrective patterns a "double three" and three patterns a "triple three." While a single three is any zigzag or flat, a triangle is an allowable final component of such combinations and in this context is called a "three." A combination is composed of simpler types of corrections, including zigzags, flats and triangles. Their occurrence appears to be the flat correction’s way of extending sideways action. As with double and triple zigzags, the simple corrective pattern components are labeled W, Y and Z. Each reactionary wave, labeled X, can take the shape of any corrective pattern but is most commonly a zigzag. As with multiple zigzags, three patterns appear to be the limit, and even those are rare compared to the more common double three.
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Combinations of threes were labeled differently by Elliott at different times, although the illustrative pattern always took the shape of two or three juxtaposed flats, as shown in Figures 1-45 and 1-46. However, the component patterns more commonly alternate in form. For example, a flat followed by a triangle is a more typical type of double three (which we now know as of 1983; see Appendix), as illustrated in Figure 1-47.
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A flat followed by a zigzag is another example, as shown in Figure 1-48. Naturally, since the figures in this section depict corrections in bull markets, they need only be inverted to observe them as upward corrections in bear markets.

Figure 1-47

Figure 1-48
For the most part, a combination is horizontal in character. Elliott indicated that the entire formation could slant against the larger trend, although we have never found this to be the case. One reason is that there never appears to be more than one zigzag in a combination. Neither is there more than one triangle. Recall that triangles occurring alone precede the final movement of a larger trend. Combinations appear to recognize this character and sport triangles only as the final wave in a double or triple three.
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Although different in that their angle of trend is sharper than the sideways trend of combinations (see the guideline of alternation in Chapter 2), double and triple zigzags (see Figure 1-26) can be characterized as non-horizontal combinations, as Elliott seemed to suggest in Nature’s Law. But double and triple threes are different from double and triple zigzags not only in their angle but in their goal. In a double or triple zigzag, the first zigzag is rarely large enough to constitute an adequate price correction of the preceding wave. The doubling or tripling of the initial form is usually necessary to create an adequately sized price retracement. In a combination, however, the first simple pattern often constitutes an adequate price correction. The doubling or tripling appears to occur mainly to extend the duration of the corrective process after price targets have been substantially met. Sometimes additional time is needed to reach a channel line or achieve a stronger kinship with the other correction in an impulse. As the consolidation continues, the attendant psychology and fundamentals extend their trends accordingly.
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As this section makes clear, there is a qualitative difference between the series 3 + 4 + 4 + 4, etc., and the series 5 + 4 + 4 + 4, etc. Notice that while an impulse wave has a total count of 5, with extensions leading to 9 or 13 waves, and so on, a corrective wave has a count of 3, with combinations leading to 7 or 11 waves, and so on. The triangle appears to be an exception, although it can be counted as one would a triple three, totaling 11 waves. Thus, if an internal count is unclear, you can sometimes reach a reasonable conclusion merely by counting waves. A count of 9, 13 or 17 with few overlaps, for instance, is likely motive, while a count of 7, 11 or 15 with numerous overlaps is likely corrective. The main exceptions are diagonals of both types, which are hybrids of motive and corrective forces.
Orthodox Tops and Bottoms
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Sometimes a pattern’s end differs from the associated price extreme. In such cases, the end of the pattern is called the "orthodox" top or bottom in order to differentiate it from the actual price high or low that occurs intra-pattern or after the end of the pattern. For example, in Figure 1-14, the end of wave (5) is the orthodox top despite the fact that wave (3) registered a higher price. In Figure 1-13, the end of wave 5 is the orthodox bottom. In Figures 1-33 and 1-34, the starting point of wave A is the orthodox top of the preceding bull market despite the higher high of wave B. In Figures 1-35 and 1-36, the start of wave A is the orthodox bottom. In Figure 1-47, the end of wave Y is the orthodox bottom of the bear market even though the price low occurs at the end of wave W. https://www.freeforex-signals.com/
This concept is important primarily because a successful analysis always depends upon a proper labeling of the patterns. Assuming falsely that a particular price extreme is the correct starting point for wave labeling can throw analysis off for some time, while being aware of the requirements of wave form will keep you on track. Further, when applying the forecasting concepts that will be introduced in Chapter 4, the length and duration of a wave are typically determined by measuring from and projecting orthodox ending points.
Reconciling Funtion and Mode
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Earlier in this chapter, we described the two functions waves may perform (action and reaction), as well as the two modes of structural development (motive and corrective) that they undergo. Now that we have reviewed all types of waves, we can summarize their labels as follows:
— The labels for actionary waves are 1, 3, 5, A, C, E, W, Y and Z.
— The labels for reactionary waves are 2, 4, B, D and X.
As stated earlier, all reactionary waves develop in corrective mode, and most actionary waves develop in motive mode. The preceding sections have described which actionary waves develop in corrective mode. They are:
— waves 1, 3 and 5 in an ending diagonal,
— wave A in a flat correction,
— waves A, C and E in a triangle,
— waves W and Y in a double zigzag and a double three,
— wave Z in a triple zigzag and a triple three.
Because the waves listed above are actionary in relative direction yet develop in corrective mode, we term them "actionary corrective" waves.
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evanpattern
https://www.gold-pattern.com/, Egypt
Posts: 0
4 months ago
Feb 17, 2020 15:38

Elliott Wave and Triangle
A triangle appears to reflect a balance of forces, causing a sideways movement that is usually associated with decreasing volume and volatility. The triangle pattern contains five overlapping waves that subdivide 3-3-3-3-3 and are labeled A-B-C-D-E. A triangle is delineated by connecting the termination points of waves A and C, and B and D. Wave E can undershoot or overshoot the A-C line, and in fact, our experience tells us that it happens more often than not. https://www.freeforex-signals.com/
There are three varieties of triangles: contracting, barrier and expanding, as illustrated in Figure 1-42. Elliott contended that the horizontal line of a barrier triangle could occur on either side of the triangle, but such is not the case; it always occurs on the side that the next wave will exceed. Elliott’s terms, "ascending" and "descending," are nevertheless useful shorthand in communicating whether the barrier triangle occurs in a bull or bear market, respectively.
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Figure 1-42 depicts contracting and barrier triangles as taking place entirely within the area of preceding price action, which may be termed a regularr triangle. Yet, it is extremely common for wave B of a contracting triangle to exceed the start of wave A in what may be termed a running triangle, as shown in Figure 1-43. Despite their sideways appearance, all triangles, including running triangles, effect a net retracement of the preceding wave at wave E’s end.
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There are several real life examples of triangles in the charts in this book (see Figures 1-27, 3-15, 5-5, 6-9, 6-10 and 6-12). As you will notice, most of the subwaves in a triangle are zigzags, but sometimes one of the subwaves (usually wave C) is more complex than the others and can take the shape of a multiple zigzag. In rare cases, one of the sub-waves (usually wave E) is itself a triangle, so that the entire pattern protracts into nine waves. Thus, triangles, like zigzags, occasionally display a development that is analogous to an extension. One example occurred in silver from 1973 through 1977 (see Figure 1-44).
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A triangle always occurs in a position prior to the final actionary wave in the pattern of one larger degree, i.e., as wave four in an impulse, wave B in an A-B-C, or the final wave X in a double or triple zigzag or combination (see next section). A triangle may also occur as the final actionary pattern in a corrective combination, as discussed in the next section, although even then it usually precedes the final actionary wave in the pattern of one larger degree than the corrective combination. Although upon extremely rare occasions a second wave in an impulse appears to take the form of a triangle, it is usually due to the fact that a triangle is part of the correction, which is in fact a double three (for example, see Figure 3-12).
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In the stock market, when a triangle occurs in the fourth wave position, wave five is sometimes swift and travels approximately the distance of the widest part of the triangle. Elliott used the word "thrust" in referring to this swift, short motive wave following a triangle. The thrust is usually an impulse but can be an ending diagonal. In powerful markets, there is no thrust, but instead a prolonged fifth wave. So if a fifth wave following a triangle pushes past a normal thrust movement, it is signaling a likely protracted wave. Post-triangle advancing impulses in commodities at degrees above Intermediate are usually the longest wave in the sequence, as explained in Chapter 6.
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Many analysts are fooled into labeling a completed triangle way too early. Triangles take time and go sideways. If you examine Figure 1-44 closely, you will see that one could have jumped the gun in the middle of wave b, pronouncing the end of five contracting waves. But the boundary lines of triangles almost never collapse so quickly. Subwave C is typically a complex wave, though wave B or D can fulfill that role. Give triangles time to develop.
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On the basis of our experience with triangles, as the examples in Figures 1-27 and later in 3-11 and 3-12 illustrate, we propose that often the time at which the boundary lines of a contracting triangle reach an apex coincides with a turning point in the market. Perhaps the frequency of this occurrence would justify its inclusion among the guidelines associated with the Wave Principle. https://www.freeforex-signals.com/gold signals

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Elliott Wave and Triangle

mehabe
paris, France
Posts: 0
5 months ago
Feb 11, 2020 7:38
freeforex
Central, Egypt
Posts: 0
5 months ago
Feb 5, 2020 23:14
Elliott Wave and Diagonal
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A diagonal is a motive pattern yet not an impulse, as it has two corrective characteristics. As with an impulse, no reactionary subwave fully retraces the preceding actionary subwave, and the third subwave is never the shortest. However, a diagonal is the only five-wave structure in the direction of the main trend within which wave four almost always moves into the price territory of (i.e., overlaps) wave one and within which all the waves are "threes," producing an overall count of 3-3-3-3-3. On rare occasions, a diagonal may end in a truncation, although in our experience such truncations occur only by the slimmest of margins. This pattern substitutes for an impulse at two specific locations in the wave structure.
Ending Diagonal
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An ending diagonal occurs primarily in the fifth wave position at times when the preceding move has gone "too far too fast," as Elliott put it. A very small percentage of diagonals appear in the C-wave position of A-B-C formations. In double or triple threes (see next section), they appear only as the final C wave. In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement. https://www.freeforex-signals.com/
A contracting diagonal takes a wedge shape within two converging lines. This most common form for an ending diagonal is illustrated in Figures 1-15 and 1-16 and shown in its typical position within a larger impulse wave. https://www.freeforex-signals.com/forex-signals/
We have found one case in which an ending diagonal’s boundary lines diverged, creating an expanding diagonal rather than a contracting one. However, it is unsatisfying analytically in that its third wave was the shortest actionary wave.
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Ending diagonals have occurred recently in Minor degree as in early 1978, in Minute degree as in February-March 1976, and in Subminuette degree as in June 1976. Figures 1-17 and 1-18 show two of these periods, illustrating one upward and one downward "real life" formation. Figure 1-19 shows our real-life possible expanding diagonal. Notice that in each case, an important change of direction followed.
Although not so illustrated in Figures 1-15 and 1-16, the fifth wave of an ending diagonal often ends in a "throw-over," i.e., a brief break of the trendline connecting the end points of waves one and three. The real-life examples in Figures 1-17 and 1-19 show throw-overs. While volume tends to diminish as a diagonal of small degree progresses, the pattern always ends with a spike of relatively high volume when a throw-over occurs. On rare occasions, the fifth subwave falls short of its resistance trendline.
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A rising ending diagonal is usually followed by a sharp decline retracing at least back to the level where it began and typically much further. A falling ending diagonal by the same token usually gives rise to an upward thrust.
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Fifth wave extensions, truncated fifths and ending diagonals all imply the same thing: dramatic reversal ahead. At some turning points, two of these phenomena have occurred together at different degrees, compounding the violence of the next move in the opposite direction.
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Leading Diagonal
It has recently come to light that a diagonal occasionally appears in the wave 1 position of impulses and in the wave A position of zigzags. In the few examples we have, the subdivisions appear to be the same: 3-3-3-3-3, although in two cases, they can be labeled 5-3-5-3-5, so the jury is out on a strict definition. Analysts must be aware of this pattern to avoid mistaking it for a far more common development, a series of first and second waves, as illustrated in Figure 1-8. A leading diagonal in the wave one position is typically followed by a deep retracement
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Figure 1-20 shows a real-life leading diagonal. We have recently observed that a leading diagonal can also take an expanding shape. This form appears to occur primarily at the start of declines in the stock market (see Figure 1-21). These patterns were not originally discovered by R.N. Elliott but have appeared enough times and over a long enough period that the authors are convinced of their validity.
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Corrective Waves https://www.freeforex-signals.com/free-forex-signals/
Markets move against the trend of one greater degree only with a seeming struggle. Resistance from the larger trend appears to prevent a correction from developing a full motive structure. This struggle between the two oppositely-trending degrees generally makes corrective waves less clearly identifiable than motive waves, which always flow with comparative ease in the direction of the one larger trend. As another result of this conflict between trends, corrective waves are quite a bit more varied than motive waves. Further, they occasionally increase or decrease in complexity as they unfold so that what are technically subwaves of the same degree can by their complexity or time length appear to be of different degree (see Figures 2-4 and 2-5). For all these reasons, it can be difficult at times to fit corrective waves into recognizable patterns until they are completed and behind us. As the terminations of corrective waves are less predictable than those for motive waves, you must exercise more patience and flexibility in your analysis when the market is in a meandering corrective mood than when prices are in a persistent motive trend.
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The single most important rule that can be gleaned from a study of the various corrective patterns is that corrections are never fives. Only motive waves are fives. For this reason, an initial five-wave movement against the larger trend is never the end of a correction, only part of it. The figures in this section should serve to illustrate this point.
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Corrective processes come in two styles. Sharp corrections angle steeply against the larger trend. Sideways corrections, while always producing a net retracement of the preceding wave, typically contain a movement that carries back to or beyond its starting level, thus producing an overall sideways appearance. The discussion of the guideline of alternation in Chapter 2 explains the reason for noting these two styles.
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Specific corrective patterns fall into three main categories: Zigzag (5-3-5; includes three types: single, double and triple);
Flat (3-3-5; includes three types: regular, expanded and running);
Triangle (3-3-3-3-3; three types: contracting, barrier and expanding; and one variation: running).
A combination of the above forms comes in two types: double three and triple three.

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evanpattern
https://www.gold-pattern.com/, Egypt
Posts: 0
5 months ago
Feb 5, 2020 15:03
Elliott Wave Principle and Detailed Analytics
Motive Waves
Motive waves subdivide into five waves and always move in the same direction as the trend of one larger degree. They are straightforward and relatively easy to recognize and interpret.
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Within motive waves, wave 2 always retraces less than 100% of wave 1, and wave 4 always retraces less than 100% of wave 3. Wave 3, moreover, always travels beyond the end of wave 1. The goal of a motive wave is to make progress, and these rules of formation assure that it will.
Elliott further discovered that in price terms, wave 3 is often the longest and never the shortest among the three actionary waves (1, 3 and 5) of a motive wave. As long as wave 3 undergoes a greater percentage movement than either wave 1 or 5, this rule is satisfied. It almost always holds on an arithmetic basis as well. There are two types of motive waves: impulse and diagonal.
Impulse
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The most common motive wave is an impulse, per Figure 1-1. In an impulse, wave 4 does not enter the price territory of (i.e., "overlap") wave 1. This rule holds for all non-leveraged "cash" markets. Futures markets, with their extreme leverage, can induce short term price extremes that would not occur in cash markets. Even so, overlapping is usually confined to daily and intraday price fluctuations and even then is rare. In addition, the actionarysubwaves (1, 3 and 5) of an impulse are themselves motive, and subwave 3 is always an impulse. Figures 1-2, 1-3 and 1-4 all depict impulses in the 1, 3, 5, A and C wave positions.
As detailed in the preceding three paragraphs, there are only a few simple rules for interpreting impulses properly. A rule is so called because it governs all waves to which it applies. Typical, yet not inevitable, characteristics of waves are called guidelines. Guidelines of impulse formation, including extension, truncation, alternation, equality, channeling, personality and ratio relationships are discussed below and throughout Chapters 2 and 4. A rule should never be disregarded. In many years of practice with countless patterns, the authors have found but one or two instances above Subminuette degree when all other rules and guidelines combined to suggest that a rule was broken. Analysts who routinely break any of the rules detailed in this section are practicing some form of analysis other than that guided by the Wave Principle. These rules have great practical utility in correct counting, which we will explore further in discussing extensions. https://www.gold-pattern.com/en
Extension
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Most impulses contain what Elliott called an extension. An extension is an elongated impulse with exaggerated subdivisions. The vast majority of impulses contain an extension in one and only one of their three actionarysubwaves. The rest either contain no extension or an extension in both subwaves three and five. At times, the subdivisions of an extended wave are nearly the same amplitude and duration as the other four waves of the larger impulse, giving a total count of nine waves of similar size rather than the normal count of "five" for the sequence. In a nine-wave sequence, it is occasionally difficult to say which wave extended. However, it is usually irrelevant anyway, since under the Elliott system, a count of nine and a count of five have the same technical significance. The diagrams in Figure 1-5, illustrating extensions, will clarify this point.
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The fact that an extension typically occurs in only one actionarysubwave provides a useful guide to the expected lengths of upcoming waves. For instance, if the first and third waves are of about equal length, the fifth wave will likely be a protracted surge. Conversely, if wave three extends, the fifth should be simply constructed and resemble wave one. https://www.gold-pattern.com/en/gold-signals.html
In the stock market, the most commonly extended wave is wave 3. This fact is of particular importance to real-time wave interpretation when considered in conjunction with two of the rules of impulse waves: Wave 3 is never the shortest actionary wave, and wave 4 may not overlap wave 1. To clarify, let us assume two situations involving an improper middle wave, as illustrated in Figures 1-6 and 1-7.
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In Figure 1-6, wave 4 overlaps the top of wave 1. In Figure 1-7, wave 3 is shorter than wave 1 and shorter than wave 5. According to the rules, neither is an acceptable labeling. Once the apparent wave 3 is proved unacceptable, it must be relabeled in some way that is acceptable. In fact, it is almost always to be labeled as shown in Figure 1-8, implying an extended wave (3) in the making. Do not hesitate to get into the habit of labeling the early stages of a third wave extension. The exercise will prove highly rewarding, as you will understand from the discussion under Wave Personality (see Chapter 2). Figure 1-8 is perhaps the single most useful guide to real time impulse wave counting in this book.
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Extensions may also occur within extensions. In the stock market, the third wave of an extended third wave is typically an extension as well, producing a profile such as shown in Figure 1-9. A real-life example is shown in Figure 5-5. Figure 1-10 illustrates a fifth wave extension of a fifth wave extension. Extended fifths are quite common in major bull markets in commodities (see Chapter 6).
Truncation
Elliott used the word "failure" to describe a situation in which the fifth wave does not move beyond the end of the third. We prefer the less connotative term, "truncation," or "truncated fifth." A truncation can usually be verified by noting that the presumed fifth wave contains the necessary five subwaves, as illustrated in Figures 1-11 and 1-12. A truncation often occurs following a particularly strong third wave.
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The U.S. stock market provides two examples of majordegree truncated fifths since 1932. The first occurred in October 1962 at the time of the Cuban crisis (see Figure 1-13). It followed the crash that occurred as wave 3. The second occurred at yearend in 1976 (see Figure 1-14). It followed the soaring and broad wave (3) that took place from October 1975 to March 1976.
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Elliott Wave Principle and Detailed Analytics
evanpattern
https://www.gold-pattern.com/, Egypt
Posts: 0
5 months ago
Jan 21, 2020 16:55
Wave Function and Elliott Wave
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Every wave serves one of two functions: action or reaction. Specifically, a wave may either advance the cause of the wave of one larger degree or interrupt it. The function of a wave is determined by its relative direction. An actionary or trend wave is any wave that trends in the same direction as the wave of one larger degree of which it is a part. A reactionary or countertrend wave is any wave that trends in the direction opposite to that of the wave of one larger degree of which it is part. Actionary waves are labeled with odd numbers and letters (for example, 1, 3, 5, a and c in Figure 1-2). Reactionary waves are labeled with even numbers and letters (for example, 2, 4 and b in Figure 1-2). https://www.gold-pattern.com/en
All reactionary waves develop in corrective mode. If all actionary waves developed in motive mode, then there would be no need for different terms. Indeed, most actionary waves do subdivide into five waves. However, as the following sections reveal, a few actionary waves develop in corrective mode, i.e., they subdivide into three waves or a variation thereof. A detailed knowledge of pattern construction is required in order to understand the distinction between actionary function and motive mode, which in the underlying model of Figures 1-1 through 1-4 are indistinct. A thorough understanding of the forms detailed later in this chapter will clarify why we have introduced these terms to the Elliott wave lexicon.
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Variations on the Basic Theme
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The Wave Principle would be simple to apply if the essential design described above were the complete description of market behavior. The real world, fortunately or unfortunately, is not so simple. While an idea such as cyclicality in markets or human experience implies precise repetition, the concept of waves allows for immense variability, which is in fact abundantly in evidence. The rest of this chapter fills out the description of how the market actually behaves. That is what Elliott set out to describe, and he succeeded in doing so.
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There are a number of specific variations on the underlying theme, which Elliott meticulously described and illustrated. He also noted the important fact that each pattern has identifiable requirements as well as tendencies. From these observations, he was able to formulate numerous rules and guidelines for proper wave identification. A thorough knowledge of such details is necessary to understand what the market can do, and at least as important, what it does not do.
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Chapters 2 and 4 present a number of guidelines to proper wave interpretation. If you do not wish to become a market analyst or are concerned that you will become bogged down in technical detail, skim the next paragraph and then skip to Chapter 3. A brief perusal of the highly condensed summary below should ensure that you will at least in later chapters as necessary aspects of the Wave Principle.
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Summary of Additional Technical Aspects
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Additional technical aspects of waves, which are discussed in detail from here through Chapter 2, are herewith stated as briefly as possible: Most motive waves take the form of an impulse, i.e., a five-wave pattern like those shown in Figures 1-1 through 1-4, in which subwave 4 does not overlap subwave 1, and subwave 3 is not the shortest subwave. Impulses are typically bound by parallel lines. One motive wave in an impulse, i.e., 1, 3 or 5, is typically extended, i.e., much longer than the other two. There is a rare motive variation called a diagonal, which is a wedge-shaped pattern that appears at the start (wave 1 or A) or the end (wave 5 or C) of a larger wave. Corrective waves have numerous variations. The main ones are named zigzag (which is the one shown in Figures 1-2, 1-3 and 1-4), flat and triangle (whose labels include D and E). These three simple corrective patterns can string together to form more complex corrections (the components of which are labeled W, X, Y and Z). In impulses, waves 2 and 4 nearly always alternate in form, where one correction is typically of the zigzag family and the other is not. Each wave exhibits characteristic volume behavior and a "personality" in terms of attendant momentum and investor sentiment.
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General readers may now skip to Chapter 3. For those who want to learn the details, we will turn our attention to the specifics of wave form.

Wave Function and Elliott Wave
freeforex
Central, Egypt
Posts: 0
6 months ago
Dec 16, 2019 19:24
The Broad Concept - Elliott Wave Principle

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In The Elliott Wave Principle — A Critical Appraisal, A. Hamilton Bolton made this opening statement:
As we have advanced through some of the most unpredictable economic climate imaginable, covering depression, major war, and postwar reconstruction and boom, I have noted how well Elliott’s Wave Principle has fitted into the facts of life as they have developed, and have accordingly gained more confidence that this Principle has a good quotient of basic value.
In the 1930s, Ralph Nelson Elliott discovered that stock market prices trend and reverse in recognizable patterns. The patterns he discerned are repetitive in form but not necessarily in time or amplitude. Elliott isolated five such patterns, or "waves," that recur in market price data. He named, defined and illustrated these patterns and their variations. He then described how they link together to form larger versions of themselves, how they in turn link to form the same patterns of the next larger size, and so on, producing a structured progression. He called this phenomenon The Wave Principle.
Although it is the best Forex Signals tool in existence, the Wave Principle is not primarily a Forex Signals tool; it is a detailed description of how markets behave. Nevertheless, that description does impart an immense amount of knowledge about the market’s position within the behavioral continuum and therefore about its probable ensuing path. The primary value of the Wave Principle is that it provides a context for market analysis and FREE Forex Signals . This context provides both a basis for disciplined thinking and a perspective on the market’s general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable. Many areas of mass human activity display the Wave Principle, but it is most popularly used in the stock market. Truly, however, the stock market is far more significant to the human condition than it appears to casual observers and even to those who make their living by it. The level of aggregate stock prices is a direct and immediate measure of the popular valuation of man’s total productive capability. That this valuation has form is a fact of profound implications that will ultimately revolutionize the social sciences. That, however, is a discussion for another time.
R.N. Elliott’s genius consisted of a wonderfully disciplined mental process, suited to studying charts of the Dow Jones Industrial Average and its predecessors with such thoroughness and precision that he could construct a network of principles that reflected all market action known to him up to the mid-1940s. At that time, with the Dow near 100, Elliott predicted a great bull market for the next several decades that would exceed all expectations at a time when most investors felt it impossible that the Dow could even better its 1929 peak. As we shall see, exceptional stock market forecasts, some of pinpoint accuracy years in advance, have accompanied the history of the application of the Elliott wave approach.
Elliott had theories regarding the origin and meaning of the patterns he discovered, which we will present and expand upon in Chapter 3. Until then, suffice it to say that the patterns described in Chapters 1 and 2 have stood the test of time.
Often one will hear several different interpretations of the market’s Elliott wave status, especially when cursory, offthe- cuff studies of the averages are made by latter-day experts. However, most uncertainties can be avoided by keeping charts on both arithmetic and semilogarithmic scale and by taking care to follow the rules and guidelines as laid down in this book. Welcome to the world of Elliott.

evanpattern
https://www.gold-pattern.com/, Egypt
Posts: 0
7 months ago
Dec 1, 2019 14:17

Truncation
Elliott used the word "failure" to describe a situation in which the fifth wave does not move beyond the end of the third. We prefer the less connotative term, "truncation," or "truncated fifth." A truncation can usually be verified by noting that the presumed fifth wave contains the necessary five subwaves, as illustrated in Figures 1-11 and 1-12. Truncation often occurs following an extensively strong third wave.

The U.S. stock market provides two examples of major degree truncated fifths since 1932. The first occurred in October 1962 at the time of the Cuban crisis (see Figure 1-13). It followed the crash that occurred as wave 3. The second occurred at year-end in 1976 (see Figure 1-14). It followed the soaring and broad wave (3) that took place from October 1975 to March 1976.

Diagonal Triangles
A diagonal triangle is a motive pattern yet not an impulse, as it has one or two corrective characteristics. Diagonal triangles substitute for impulses at specific locations in the wave structure. As with impulses, no reactionary subwave fully retraces the preceding actionary subwave, and the third subwave is never the shortest. However, diagonal triangles are the only five-wave structures in the direction of the main trend within which wave four almost always moves into the price territory of (i.e., overlaps) wave one. On rare occasions, a diagonal triangle may end in a truncation, although in our experience such truncations occur only by the slimmest of margins.
Ending Diagonal
An ending diagonal is a special type of wave that occurs primarily in the fifth wave position at times when the preceding move has gone "too far too fast," as Elliott put it. A very small percentage of ending diagonals appear in the C wave position of A-B-C formations. In double or triple threes (to be covered in Lesson 9), they appear only as the final "C" wave. In all cases, they are found at the termination points of larger patterns, indicating exhaustion of the larger movement.
Ending diagonals take a wedge shape within two converging lines, with each subwave, including waves 1, 3 and 5, subdividing into a "three," which is otherwise a corrective wave phenomenon. The ending diagonal is illustrated in Figures 1-15 and 1-16 and shown in its typical position in larger impulse waves. Figure 1-15 Figure 1-16
We have found one case in which the pattern's boundary lines diverged, creating an expanding wedge rather than a contracting one. However, it is unsatisfying analytically in that its third wave was the
shortest actionary wave, the entire formation was larger than normal, and another interpretation was possible, if not attractive. For these reasons, we do not include it as a valid variation.
Ending diagonals have occurred recently in Minor degree as in early 1978, in Minute degree as in February-March 1976, and in Subminuette degree as in June 1976. Figures 1-17 and 1-18 show two of these periods, illustrating one upward and one downward "real-life" formation. Figure 1-19 shows our real-life possible expanding diagonal triangle. Notice that in each case, an important change of direction followed.

Although not so illustrated in Figures 1-15 and 1-16, fifth waves of diagonal triangles often end in a "throw-over," i.e., a brief break of the trendline connecting the end points of waves one and three. Figures 1-17 and 1-19 show real life examples. While volume tends to diminish as a diagonal triangle of small degree progresses, the pattern always ends with a spike of relatively high volume when a throw-over occurs. On rare occasions, the fifth subwave will fall short of its resistance trendline.
A rising diagonal is bearish and is usually followed by a sharp decline retracing at least back to the level where it began. A falling diagonal by the same token is bullish, usually giving rise to an upward thrust.
Fifth wave extensions, truncated fifths and ending diagonal triangles all imply the same thing: dramatic reversal ahead. At some turning points, two of these phenomena have occurred together at different degrees, compounding the violence of the next move in the opposite direction.