Elliott Wave Theory in Summary

Here's a quick rundown of everything we learned about Elliott Wave Theory:

Fractals are fractals, and Elliott Waves are fractals.

Each wave can be divided into pieces, each of which is a near-identical duplicate of the whole. This trait is referred to as “self-similarity” by mathematicians.

A 5-3 wave pattern is used to describe the movement of a trending market.

The impulse wave is the first of five 5-wave patterns.

There will always be an extension of one of the three impulse waves (1, 3, or 5). The third wave is usually the longest.

A corrective wave is the second three-wave pattern. To monitor the adjustment, the letters A, B, and C are used instead of numerals.

Waves 1, 3, and 5 have a smaller 5-wave impulse pattern, but Waves 2 and 4 have smaller 3-wave corrective patterns.

Although there are 21 different sorts of corrective patterns, they are all made up of three extremely simple and straightforward shapes.

Zig-zags, flats, and triangles are the three basic corrective wave patterns.

Three Fundamental Principles

When it comes to naming waves, Elliott Wave Theory has three cardinal rules:

Wave 3 can never be the shortest impulse wave, according to rule number one.

Wave 2 can never go further than Wave 1's beginning.

Wave 4 can NEVER cross in the same pricing area as Wave 1 (Rule #3).

If you look closely at a chart, you'll notice that the market moves in waves.

Because the forex market rarely moves in a textbook-perfect manner, you'll need a lot of time interpreting waves before you feel comfortable with Elliott waves.

Keep working hard and never give up!