What are the components of Elliott wave theory?
This the 4th article of our Elliott wave learning series which is a price action based technical analysis method. Here we shall break down elliott wave theory in its components so that in next articles we can concentrate on each parts.
Components of Elliott wave theory
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From the explanation of previous article we have understood that any wave cycle can be subdivided into 8 waves 1,2,3,4,5 and A,B,C either the wave is Bigger/Inner. Out of these 8 waves 1,3,5,A and C is impulse towards main trend and 2,4 and B is correction towards opposite direction of main trend.
Having this basic idea of Elliott wave now we shall move to learn the theory in more detail. Study of Elliott wave theory can be subdivided in four parts as mentioned below:
- Wave cycles — We have already learnt what wave cycle is.
- Wave’s Personalities
- Fibonacci calculations
- Wave patterns
With the use of these four principles we can use EWT to predict the market move and missing any one of these will make us confuse to use this wonderful method.
We shall cover wave’s personalities in the next article.
Also read other topic covered under our free Elliott wave theory course :
- Concept of Elliot Wave Theory- Wave cycle
- Rules of Elliott wave Theory
- Fibonacci Ratio.
- Component of EWT
- Elliott Wave Personality
- Application of fib ratio in EWT
- Elliot wave patterns
- Different Patterns in EWT
- Impulse
- Leading Diagonal Triangle
- Ending Diagonal Triangle
- Simple Zigzag correction
- 3–3–5 Flat Correction
- Irregular Correction
- Formation of Irregular Correction
- Complex correction.
- Extended and failure wave
- Rules of alteration
- Combining patterns with Fibonacci ratio
- Importance of 38% retracement ,alternate wave count and reflex point.
- Time frame to use in Elliot wave analysis
- Identifying multibagger stock
- Practical use of the theory