Elliott Wave 3 Theory - MTPredictor (2024)

FAQs

How to measure wave 3 in Elliott wave? ›

The third wave is a 161.8% Fibonacci extension of the first wave. As it is an impulse wave it is always in the direction of an underlying trend. In order to identify the 3rd wave, the second wave has to be completed and fall under the general rules of Elliot wave theory.

A correct Elliott wave count must observe three rules: Wave 2 never retraces more than 100% of wave 1. Wave 3 cannot be the shortest of the three impulse waves, namely waves 1, 3 and 5. Wave 4 never enters the price territory of wave 1.

Award-winning analyst Chris Carolan teaches you how to use his favorite three key technical indicators to spot trends and confirm your Elliott wave analysis — Relative Strength Index (RSI), Jurik RSX and Keltner channels.

Wave 3. Wave 3 is likely to extend, especially if wave 1 does not. A normal wave 3 should reach at least 1.618 of wave 1 at a minimum. If it does not do so, it may be putting in a 2nd 1-2 wave indicating that it is going to extend.

Where the impulse wave had a general structure count of 5-3-5-3-5, the ending diagonal has a structure count of 3-3-3-3-3. All five of the waves of an ending diagonal break down to only three waves each, indicating exhaustion of the larger degree trend.

That will rarely provide an accurate analysis of market sentiment, and when most of the projections based upon this type of “analysis” fail, one can now understand why. Many also take issue with the fact that Elliott Wave analysis suggests you maintain both a primary analysis, as well as an alternative analysis.

So, there is no single “best” timeframe that works for all markets or all traders. So, if you like longer-term trades (weeks, months, years), a daily, weekly, or monthly wave count will likely work best for you as a starting point to determine the longer-term wave count context.

Wave 3 will often be 1.618 x the length of wave 1. 2.618 is also common.

To trade Elliott waves, you first determine whether your market is in a bull or bear trend, and then whether it is in the motive or corrective phase of the pattern. From there, you can work out which wave the market is currently in and make predictions about where it might head next.

– If wave 1 is extended – wave 5 must be shorter than wave 3, otherwise Elliott Wave count is wrong. – If wave 3 is extended- wave 5 target could be got in 2 ways. It could be eather equal in length to the wave 1 or it's 61.8% fibonacci extension of the length wave 1+wave 3 related to the wave 4.

What is the triangle rule Elliott Wave? ›

Triangles are a correction five-wave pattern (marked as A-B-C-D-E), which is divided into five types. This pattern is formed in a position prior to the final wave in an impulse or a correction. For example, a triangle could be formed in a wave four in an impulse or wave B in a zigzag.

1. ZigCycleBarCount [MsF] This is the best Elliott Wave indicator available on TradingView because it allows you to easily spot trends, is highly customisable, and it also comes with an integrated bar count, for a truly complete overview of your chart.

It simply states that one should use both an arithmetic scale chart and a semi-log scale chart when looking at Elliott Waves. Arithmetic scale charts are good for looking at waves on lower degrees, but semi-log scale charts are good for bringing large trends (higher degrees) into perspective.

Thus, a "3-foot" wave is roughly six feet high (in actuality a height of ~1.8 m), i.e., head-high to a 6-foot (~180 cm) person; a "2-foot" wave is roughly four feet high (height of ~1.2 m), i.e., chest-high to such a person; and a "6- to 8-foot" wave would be 2 to approaching 3 times head-high to such a person (height ...

Wave height is affected by wind speed, wind duration (or how long the wind blows), and fetch, which is the distance over water that the wind blows in a single direction.

Wave Parameters | Amplitude, Frequency & Period - Video | Study.com.