THE ELLIOTT WAVE PRINCIPLE
(b) Figure 2-6 (a) 9-wave extension in uptrend; (b) 9-wave extension in
downtrend.
• They are doubly retraced, that is, a correction will pass over the same ground
twice, down and up.
• If extensions occur in wave 3, double retracement will be satisfied by wave 4
and wave 5.
All of the possibilities that Elliott introduced and described in his
publications have not been shown here. The purpose of this review was to show
the essence of Elliott's ideas and follow them as they become more intricate. In
its most complex stages, it is even difficult for an experienced Elliott
follower to apply these rules to real-time trading.
Elliott
admitted, "Corrections in bull and bear swings are more difficult to learn". The
problem seems to be that the complex nature of the wave structure does not
leave room to forecast future price moves in advance. It looks perfect in
retrospect. The multitude of rules and situations described by Elliott can be
used to fit any price pattern after the fact. But that is not enough.
FIBONACCI RATIO
Elliott is given the most credit for introducing the Fibonacci summation series
as an investment tool. He wrote, "Later I found that the basis of my
discoveries was a law of Nature known to the designers of the Great Pyramid 'Gizeh'
which may have been constructed 5000 years ago. Fibonacci visited Egypt and on
his return disclosed a Summation Series" (Elliott, p. 42). Chapter 1 presented
the series: Forex 101.
Forex Art Of Fibonacci (Forex 101)
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Forex Art Of Fibonacci (Forex 102)
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