Summer School

Question 1

What are Fractals?

Answer 1

fractals are structures that can be split into parts, each of which is a very similar copy of the whole. Mathematicians like to call this property “self-similarity”.

Question 2

Mr. Elliott showed that a trending market moves in what he calls a?

Answer 2

5-3 wave pattern.

Question 3

The first 5-wave pattern is called?

Answer 3

impulse waves.

Question 4

The last 3-wave pattern is called?

Answer 4

corrective waves.

Question 5

Waves 1, 3, 5 are?

Answer 5

motive, meaning they go along with the overall trend

Question 6

Waves 2 and 4 are?

Answer 6

corrective

Question 7

There are three cardinal rules in Elliott Wave Theory when labeling waves:

Answer 7

Rule Number 1: Wave 3 can NEVER be the shortest impulse wave
Rule Number 2: Wave 2 can NEVER go beyond the start of Wave 1
Rule Number 3: Wave 4 can NEVER cross in the same price area as Wave 1

Question 8

For both the bullish and bearish versions of the ABCD chart pattern, the lines AB and CD are known as the?

Answer 8

legs while BC is called the correction or retracement.

Question 9

If you use the Fibonacci retracement tool on leg AB, the retracement BC should reach until the?

Answer 9

0.618 level. Next, the line CD should be the 1.272 Fibonacci extension of BC.

Question 10

Name a couple more rules for a valid ABCD pattern?

Answer 10

The length of line AB should be equal to the length of line CD.
The time it takes for the price to go from A to B should be equal to the time it takes for the price to move from C to D.

Question 11

The three-drive pattern is a lot like the ABCD pattern except that it has?

Answer 11

three legs (now known as drives) and two corrections or retracements.

Question 12

The Gartley “222” pattern is named for the page number it is found on in?

Answer 12

H.M. Gartleys book, Profits in the Stock Market.

Question 13

Gartley patterns normally form when a?

Answer 13

correction of the overall trend is taking place and look like ‘M’ (or ‘W’ for bearish patterns).

Question 14

A Gartley forms when the price action has been going on a

Answer 14

recent uptrend (or downtrend) but has started to show signs of a correction.

Question 15

What makes the Gartley such a nice setup when it forms is the?

Answer 15

reversal points are a Fibonacci retracement and Fibonacci extension level. This gives a stronger indication that the pair may actually reverse.

Question 16

The “perfect” Gartley pattern has the following characteristics:

Answer 16

Move AB should be the .618 retracement of move XA.
Move BC should be either .382 or .886 retracement of move AB.
If the retracement of move BC is .382 of move AB, then CD should be 1.272 of move BC. Consequently, if move BC is .886 of move AB, then CD should extend 1.618 of move BC. Move CD should be .786 retracement of move XA

Question 17

The “perfect” crab pattern must have the following aspects:

Answer 17

Move AB should be the .382 or .618 retracement of move XA.
Move BC can be either .382 or .886 retracement of move AB.
If the retracement of move BC is .382 of move AB, then CD should be 2.24 of move BC. Consequently, if move BC is .886 of move AB, then CD should be 3.618 extension of move BC.
CD should be 1.618 extension of move XA.

Question 18

Come 2001, Scott Carney founded another Harmonic Price Pattern called?

Answer 18

the “Bat.”

Question 19

The Bat is defined by the?

Answer 19

.886 retracement of move XA as Potential Reversal .886 retracement of move XA as Potential Reversal Zone.

Question 20

The Bat pattern has the following qualities:

Answer 20

Move AB should be the .382 or .500 retracement of move XA.
Move BC can be either .382 or .886 retracement of move AB.
If the retracement of move BC is .382 of move AB, then CD should be 1.618 extension of move BC. Consequently, if move BC is .886 of move AB, then CD should be 2.618 extension of move BC.
CD should be .886 retracement of move XA.

Question 21

Created by Bryce Gilmore, the perfect Butterfly pattern is defined by the?

Answer 21

.786 retracement of move AB with respect to move XA.

Question 22

The Butterfly contains these specific characteristics:

Answer 22

Move AB should be the .786 retracement of move XA.
Move BC can be either .382 or .886 retracement of move AB.
If the retracement of move BC is .382 of move AB, then CD should be 1.618 extension of move B Consequently, if move BC is .886 of move AB, then CD should extend 2.618 of move BC.
CD should be 1.27 or 1.618 extension of move XA.

Question 23

There are three basic steps in spotting Harmonic Price Patterns:

Answer 23

Step 1: Locate a potential Harmonic Price Pattern
Step 2: Measure the potential Harmonic Price Pattern
Step 3: Buy or sell on the completion of the Harmonic Price Pattern

Question 24

There are six harmonic price patterns:

Answer 24

The ABCD Pattern
    The Three-Drive Pattern
    The Gartley Pattern
    The Crab Pattern
    The Bat Pattern
    The Butterfly Pattern

Question 25

“Heikin Ashi”, also known as “Heinlein-Ashi” or “Heiken Ashi” is a charting technique used to display prices that, at a glance, looks similar to?

Answer 25

a traditional Japanese candlestick chart.

Question 26

Applying the Heikin Ashi technique to a price chart can help you decide whether to?

Answer 26

stay in the trade or get out.

Question 27

Heikin Ashi charts make candlestick charts more readable for traders who want to know when to?

Answer 27

stay in a trade and ride a strong trend and when to get out when the trend weakens.

Question 28

Basically, Heikin Ashi is a modified candlestick charting technique that rearranges how the?

Answer 28

price is displayed so trend traders can have a higher confidence level when deciding whether to remain in a trade or exit.

Question 29

Heikin Ashi means the?

Answer 29

“average pace of price”.

Question 30

If you look closely at the Heikin Ashi chart, you’ll notice that each of the Heikin Ashi candlesticks start from the?

Answer 30

MIDDLE of the candlestick before it, and not from the level where the previous candlestick had closed.

Question 31

In a Heikin Ashi candelstick the open =?

Answer 31

Open = [(Open price of previous candle) + (Close price of previous candle)] / 2

Question 32

The CLOSE of each Heikin Ashi candlestick equals?

Answer 32

the average value between the four parameters: open, close, high, and low: Close = (Open + High + Low + Close) / 4

Question 33

The HIGH of a Heikin Ashi candlestick takes the actual high of the period. This could be the?

Answer 33

highest shadow, the open, or the close. Whichever is the highest. High = Maximum Price Reached

Question 34

The LOW of a Heikin Ashi candlestick takes the actual low of the period. This could be the?

Answer 34

lowest shadow, the open, or the close. Whichever is the lowest. Low = Minimum Price Reached

Question 35

The main thing you want to look for on a Heikin Ashi chart to determine trend strength is?

Answer 35

shadowless or wickless candlesticks opposite the trend.

Question 36

When compared to the traditional Japanese candlestick chart, Heikin Ashi?

Answer 36

slows down the speed of the market, eliminating unnecessary false signals.