THE ELLIOTT WAVE PRINCIPLE
Figure 2-7 Fibonacci Summation
Series integrated into the complete cycle of the stock market from Elliott.
TREND CHANNELS
To make his analysis more definitive, Elliott tried to solve the timing problem
with trend channels, parallel lines drawn across the bottom and top of a price
move. The trend channels are used only to forecast the end of wave 5.
In an upwards
movement of five waves, a base line is drawn across the bottom (the end) of
waves 2 and 4. Then a parallel line is drawn through the highest point wave 3
(Figure 2-8).
Elliott noted,
"Usually wave 5 will end approximately at the parallel line, when [an]
arithmetic scale is used. However, if wave 5 exceeds the parallel line
considerably and the composition of wave 5 indicates that it has not completed
its pattern, then the entire movement, from the beginning of wave 1, should be
graphed on semi-log scale. The end of wave 5 may reach, but not exceed, the
parallel line" (p. 60). If the same figures were graphed on both scales, the
pictures would appear as in Figure 2-9. Forex 101.
Forex Art Of Fibonacci (Forex 101)
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Forex Art Of Fibonacci (Forex 102)
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