How to Trade Forex with the Elliott Wave Model:

Transcription

1 How to Trade Forex with the Elliott Wave Model: Lessons in Real-Time Trading Jim Martens, Senior Forex Analyst, editor The International Currencies Specialty Service and Global Market Perspective Elliott Wave International, Inc. P.O. Box 1618, Gainesville, GA (800) or (770) Fax (770)

2 Although it is the best forecasting tool in existence, the Wave Principle is not primarily a forecasting tool; it is a detailed description of how markets behave. This context provides both a basis for disciplined thinking and a perspective on the market s general position and outlook. Elliott Wave Principle, Frost and Prechter 2011 Elliott Wave International Jim Martens 2

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8 Bull Market Trade Setups Wave Two Wave Four Wave B 2011 Elliott Wave International Jim Martens 8

9 Bull Market Trading Opportunities Wave Three Wave Five Wave C 2011 Elliott Wave International Jim Martens 9

10 Motive wave patterns fall into two categories: 1. Impulse Waves Including extensions and truncations 2. Diagonal Triangles Two types: Leading and Ending 2011 Elliott Wave International Jim Martens 10

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12 Motive wave patterns fall into two categories: 1. Impulse Waves Including extensions and truncations 2. Diagonal Triangles Two types: Leading and Ending 2011 Elliott Wave International Jim Martens 12

13 Bear Market Bull Market 2011 Elliott Wave International Jim Martens 13

14 Specific corrective patterns fall into four main categories: 1. Zigzag (5-3-5) Includes three types: single, double, and triple 2. Flat (3-3-5) Includes three types: regular, expanded and running; 3. Triangle ( ) Four types: Three of the contracting variety (ascending, descending, and symmetrical) and one of the expanding variety (reverse symmetrical); 4. Combination Two types: double three and triple three Elliott Wave International Jim Martens 14

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17 Specific corrective patterns fall into four main categories: 1. Zigzag (5-3-5) Includes three types: single, double, and triple 2. Flat (3-3-5) Includes three types: regular, expanded and running; 3. Triangle ( ) Four types: Three of the contracting variety (ascending, descending, and symmetrical) and one of the expanding variety (reverse symmetrical); 4. Combination Two types: double three and triple three Elliott Wave International Jim Martens 17

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19 Specific corrective patterns fall into four main categories: 1. Zigzag (5-3-5) Includes three types: single, double, and triple 2. Flat (3-3-5) Includes three types: regular, expanded and running; 3. Triangle ( ) Four types: Three of the contracting variety (ascending, descending, and symmetrical) and one of the expanding variety (reverse symmetrical); 4. Combination Two types: double three and triple three Elliott Wave International Jim Martens 19

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21 Specific corrective patterns fall into four main categories: 1. Zigzag (5-3-5) Includes three types: single, double, and triple 2. Flat (3-3-5) Includes three types: regular, expanded and running; 3. Triangle ( ) Four types: Three of the contracting variety (ascending, descending, and symmetrical) and one of the expanding variety (reverse symmetrical); 4. Combination Two types: double three and triple three Elliott Wave International Jim Martens 21

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23 Bull Market Bear Market 2011 Elliott Wave International Jim Martens 23

24 Bull Market Bear Market 2011 Elliott Wave International Jim Martens 24

25 Bull Market Bear Market 2011 Elliott Wave International Jim Martens 25

26 Wave Three Wave three typically travels a 1.618, or multiple of wave one. Within waves one, three and five, wave three is the impulse wave most likely to extend Elliott Wave International Jim Martens 26

27 Wave Five Wave five is the final wave within an impulse wave and should clearly subdivide into five waves. Fibonacci relationships most often found in fifth waves are as follows: Wave 5 = Wave 1 Wave 5 = x Wave 1 Wave 5 =.618 x Waves 1 through Elliott Wave International Jim Martens 27

28 Wave A If wave A unfolds in five waves, the operative corrective pattern is a Zigzag. A three-wave wave A implies that a Flat or Expanded Flat correction is taking shape. Depending on wave position, a wave A that subdivides into three waves could mean that a Triangle is taking shape Elliott Wave International Jim Martens 28

29 Wave C If wave C is part of a fourth-wave correction, it will most often end within the span of the previous fourth wave, likely near its terminus. The most common Fibonacci retracement for fourth-wave corrections is a.382 multiple of wave three. The most common Fibonacci retracement for second-wave corrections is a.618 multiple of wave one. The most common relationship between waves C and A is equality Elliott Wave International Jim Martens 29

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38 The most common relationship between waves C and A is equality Elliott Wave International Jim Martens 38

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40 The most common relationship between waves C and A is equality Elliott Wave International Jim Martens 40

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42 If wave C is part of a fourth-wave correction, it will most often end within the span of the previous fourth wave, likely near its terminus Elliott Wave International Jim Martens 42

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44 The most common relationship between waves C and A is equality Elliott Wave International Jim Martens 44

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71 Elliott Wave International, Inc. P.O. Box 1618, Gainesville, GA (800) or (770) Fax (770) Elliott Wave International Jim Martens 71