Elliot Wave Basic: Part-2
Basic Sequence:
There
are two types of waves: impulse and corrective. Impulse waves move in the
direction of the larger degree wave. When the larger degree wave is up,
advancing waves are impulsive and declining waves are corrective. When the
larger degree wave is down, impulse waves are down and corrective waves are up.
Impulse waves, also called motive waves, move with the bigger trend or larger
degree wave. Corrective waves move against the larger degree wave.
The
chart above shows a rising 5-wave sequence. The entire wave is up as it moves
from the lower left to the upper right of the chart. Waves 1,3 and 5 are
impulse waves because they move with the trend. Waves 2 and 4 are corrective
waves because they move against this bigger trend. A basic impulse advance
forms a 5-wave sequence.
A
basic corrective wave forms with three waves, typically a, b and c. The chart
below shows an abc corrective sequence. Notice that waves a and c are impulse
waves (green). This is because they are in the direction of the larger degree
wave. This entire move is clearly down, which represents the larger degree
wave. Waves a and c move with the larger degree wave and are therefore impulse
waves. Wave b, on the other hand, moves against the larger degree wave and is a
corrective wave (red).
Combining
a basic 5 wave impulse sequence with a basic 3 wave corrective sequence yields
a complete Elliott Wave sequence, which is a total of 8 waves. According to
Elliott, this complete sequence is divided into two distinct phases: the
impulse phase and the corrective phase. The abc corrective phase represents a
correction of the larger impulse phase.
These
8-wave charts show two larger degree waves (I and II) as well as the lesser
degree waves within these larger degree waves. Waves 1-2-3-4-5 are one lesser
degree than Wave I. By extension, Wave I is one larger degree than Waves
1-2-3-4-5. Waves a-b-c are one lesser degree than Wave II.
***For read "Elliot Wave Basic, Part One", Please click the link below..
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.