WORKING WITH A 5-WAVE
PATTERN
Figure 3-3 (a) Trend line on
semi-log chart is touched; (b) trend line on semi-log chart is not touched.
Case 3
"When 5 waves upward have been completed, 3 waves down will follow." (Elliott,
p. 112). Using this approach, we would:
• Wait for 5 waves to be completed.
• Wait for the a,b correction.
• Invest when wave c penetrates the base line.
This strategy is shown in Figure 3-4. This is a very conservative approach, and
the pattern can be found over and over again in the charts. The advantage of
this strategy is that:
• The market has already changed trend direction at the time of entry, and
• There is still good profit potential, measured by the combined amplitude of
all five waves. (For example, Figure 3-5 shows how powerful this signal can be
in the Japanese yen.)
Figure 3-4 Complete cycle of 5 impulse waves and 3 corrective waves. (FOREX 101)
Forex Art Of Fibonacci (Forex 101)
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Forex Art Of Fibonacci (Forex 102)
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