Summer School Flashcards
Who is the founder of the Elliot Wave Theory?
Ralph Nelson Elliott
What do you call the repetitive upward and downward price swings caused by the market’s collective psychology?
waves
The Elliott Wave Theory was first published in a book entitled ______.
The Wave Principle
Waves 2 and 4 are called ________ waves.
corrective
Waves 1, 3, and 5 are called _______ waves.
motive
People started labeling the ____ wave as the extended one as it tends to be longer than the other motive waves.
third
There are ____ types of ABC corrective patterns.
21
True or False: Triangle ABC corrective patterns are simple sideways corrective waves.
False
True or False: A Minor wave is made up of Minute waves.
True
What does TRUNCATION mean?
Wave 5 does not move beyond the end of Wave 3
Wave 2 cannot go beyond the start of Wave 1.
Always true
Waves 2 and 4 bounce off Fibonacci retracement levels.
Sometimes true
The first wave in the 5-3 wave pattern is called the _______.
Impulse wave
Name the three fundamental corrective wave patterns.
flats, zig-zags, and triangles
What do you call the three legs of a Three-Drive pattern?
Drives
Which trading tool should you use to spot ABCD and Three-Drive patterns?
Fibonacci
How does the Gartley Pattern differ from the ABCD Pattern?
A Gartley Pattern is an ABCD Pattern preceded by a significant high or low
A harmonic price pattern that allows you to put a very tight stop loss, and is considered the most accurate.
Crab
Discovered by Byrce Gilmore, this harmonic price pattern is defined by the .786 retracement of move AB with respect to move XA
Butterfly
A harmonic price pattern defined by the .886 retracement of move XA as Potential Reversal Zone.
Bat
Which of the following is NOT a harmonic price pattern?
The Carney Pattern
What do you do after you locate a potential harmonic price pattern?
Measure the potential harmonic price pattern
Divergences can be spotted by comparing…
price action and an indicator
What are the two types of divergences?
Regular and Hidden
Which type of divergence usually signals a trend reversal?
Regular Divergence
In a regular bullish divergence, if price is making lower lows, the oscillator should be making..
higher lows
What kind of divergence is formed when price makes higher highs while the oscillator makes lower highs?
Regular bearish divergence
Why are hidden divergences called such?
Because they are hiding in the current trend
What do hidden divergences signal?
Trend continuation
In a hidden bearish divergence, if price is making lower highs, the indicators should be making..
Higher highs
When do hidden bullish divergences normally form?
Uptrend
Which among these shouldn’t be combined with divergence trading?
a. Candlesticks
b. Trend lines
c. Support and resistance
d. None of the above
None of the above
Which is part of the momentum trick in confirming a divergence?
Both
True or False: If both price and the oscillator break their respective trend lines, it could indicate that a new trend is forming.
True
In order for a divergence to exist, price must’ve formed either of the following except:
a. Double Top
b. Higher highs
c. Consolidation
Consolidation
True or False: It’s okay if the bottoms or tops you connect aren’t consecutive. As long as one is higher or lower, it’s a valid divergence.
False
True or False: In looking for divergences, you should focus on the tops and bottoms and forget about everything else.
True
Which among these isn’t one of the “9 Rules for Trading Divergences”?
a. Must use stochastics only as the indicator
b. Draw lines on successive tops and bottoms
c. Keep in line
Must use stochastics only as the indicator
True or False: Divergences should be used as an indicator, not as a signal to enter a trade.
True
