Elliot Wave Theory

Question 1

What is the Elliot Wave Theory?

Answer 1

Developed in 1930 by Ralph Elliot. The Elliott Wave theory is a theory intechnical analysisused to describe price movements in the financial market. The theory was developed by Ralph Nelson Elliott after he observed and identified recurring, fractal wave patterns.Waves can be identified in stock price movements and in consumer behavior.

Question 2

When does the Elliot Wave Theory apply?

Answer 2

Only applies in a trending market

Question 3

What are the waves in the Elliot Wave Theory?

Answer 3

Wave 1 - Impulse Wave
Wave 2 - Correction Wave
Wave 3 - Impulse Wave
Wave 4 - Correction Wave
Wave 5 - Impulse Wave

Question 4

What is the ideal pull back for a Wave 2 or Wave 4? Where can it go to?

Answer 4

0.382, can go to 0.618

Question 5

What is the safest target for a Wave 3? What is the best target? What are the targets for an extended Wave 3?

Answer 5

Safest is 1.272, best is 1.618 and an extended wave 3 can run to 2.618 or 3.6218

Question 6

What are the targets for a Wave 5? Where can it run to?

Answer 6

Target is previous high/low from Wave 3 or 0.618. Can run to 1.0.

Question 7

What is a simple pullback? What can we expect for the pullback following a simple pullback?

Answer 7

A simple pullback has a clean pullback, no A, B, C. We can expect a complex or A, B, C pullback following a simple pullback.