Someone recently asked me if trading Elliott Wave patterns could be done for day trading...This was action and live commentary on the Dow Jones on 19/07/2010.This is just an example of how the theory can be applied. I did not trade this as I am more of a “swing trader”... however this is how I was looking at the market in real time.It is not difficult when you know the rules. When you get used to looking at movement structures, the logic comes naturally... just a matter of time and practice.This was a good call, but it was by no means guaranteed. For those of you sceptical of Elliott Wave... I would say “always keep a healthy degree of scepticism”... it is by no means a “holy grail” and don’t let any analyst try and convince you that it is!But it has it’s uses at times.Note: The (A)-(B)-(C) pattern completed and there was a sharp sell off... but this doesn’t mean that the upside is over and done for just yet... as with the a-b-c pattern, there was no “confirmation”.Following a completed pattern, you want to see something that will confirm the pattern is indeed a key point. In this case, as with the simple a-b-c pattern we are looking for an “impulse”... should be fail to see it (ie: only a 3 wave move) then we can do just as we did with the a-b-c pattern... and that is re-label it with 1 degree higher possibility and expect a wave ((C)) 5 wave rally.This is one of the most annoying things about Elliott... patterns can expand to higher degrees when you think they have just completed... this is why “confirmation” is so important.I hope you find this interesting and it helps you in approaching and tackling the practical application of the theory.Max
Comments