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  1. 22 Elliott Wave Principle and Depth of Corrective Waves No market approach other than the Wave Principle gives a satisfactory answer to the question, "How far down can a bear market be expected to go?" The primary guideline is that corrections, especially when they themselves are fourth waves, tend to register their maximum retracement within the span of travel of the previous fourth wave of one lesser degree, most commonly near the level of its terminus. forex signals Example #1: The 1929-1932 Bear Market Our analysis of the period from 1789 to 1932 uses the chart of stock prices adjusted to constant dollars developed by Gertrude Shirk and presented in the January 1977 issue of Cycles magazine. Here we find that the 1932 Supercycle low bottomed within the area of the previous fourth wave of Cycle degree, an expanding triangle spanning the period between 1890 and 1921.(see Figure 5-4) free forex signals Figure 5-4 Example #2: The 1942 Bear Market Low In this case, the Cycle degree bear market from 1937 to 1942 was a zigzag that terminated within the area of the fourth Primary wave of the bull market from 1932 to 1937. (see Figure 5-5) Figure 5-5 Example #3: The 1962 Bear Market Low https://www.freeforex-signals.com/ The wave ④ plunge in 1962 brought the averages down to just above the 1956 high of the five-wave Primary sequence from 1949 to 1959. Ordinarily, the bear would have reached into the zone of wave (4), the fourth wave correction within wave ③. This narrow miss nevertheless illustrates why this guideline is not a rule. The preceding strong third wave extension and the shallow A wave and strong B wave within (4) indicated strength in the wave structure, which carried over into the moderate net depth of the correction.(see Figure 5-5) Example #4: The 1974 Bear Market Low free forex signals The final decline into 1974, ending the 1966-1974 Cycle degree wave IV correction of the entire wave III rise from 1942, brought the averages down to the area of the previous fourth wave of lesser degree (Primary wave ④).Again, Figure 5-5 shows what happened. Example #5: London Gold Bear Market, 1974-1976 Here we have an illustration from another market of the tendency for a correction to terminate in the area of travel of the preceding fourth wave of one lesser degree.(see figure 6-11) free forex signals Figure 6-11 Our analysis of small degree wave sequences over the last twenty years further validates the proposition that the usual limitation of any bear market is the travel area of the preceding fourth wave of one lesser degree, particularly when the bear market in question is itself a fourth wave. However, in a clearly reasonable modification of the guideline, it is often the case that if the first wave in a sequence extends, the correction following the fifth wave will have as a typical limit the bottom of the second wave of lesser degree. For example, the decline into March 1978 in the DJIA bottomed exactly at the low of the second wave in March 1975, which followed an extended first wave off the December 1974 low. https://www.freeforex-signals.com/ On occasion, a flat correction or triangle, particularly if it follows an extension, will fail, usually by a slim margin, to reach into the fourth wave area (see Example #3). A zigzag, on occasion, will cut deeply and move down into the area of the second wave of lesser degree, although this almost exclusively occurs when the zigzag is itself a second wave. "Double bottoms" are sometimes formed in this manner. Behavior Following Fifth Wave Extensions free forex signals Having cumulatively observed the hourly changes in the DJIA for over twenty years, the authors are convinced that Elliott imprecisely stated some of his findings with respect to both the occurrence of extensions and the market action following an extension. The most important empirically derived rule that can be distilled from our observations of market behavior is that when the fifth wave of an advance is an extension, the ensuing correction will be sharp and find support at the level of the low of wave two of the extension. Sometimes the correction ends there, as illustrated in Figure 2-6, and sometimes only wave A ends there. Although a limited number of real life examples exist, the precision with which A waves have reversed at this level is remarkable. Figure 2-7 is an illustration showing both a zigzag and an expanded flat correction. An example involving a zigzag can be found in Figure 5-5 at the low of wave Ⓐ of II and an example involving an expanded flat can be found in Figure 2-16 at the low of wave a of A of 4. As you may be able to discern in Figure 5-5, wave a of (IV) bottoms near wave (2) of ⑤, which is an extension within the wave V from 1921 to 1929. forex trading signals Since the low of the second wave of an extension is commonly in or near the price territory of the immediately preceding fourth wave of one larger degree, this guideline implies behavior similar to that of the preceding guideline. It is notable for its precision, however. Additional value is provided by the fact that fifth wave extensions are typically followed by swift retracements. Their occurrence, then, is an advance warning of a dramatic reversal to a specific level, a powerful combination of knowledge. This guideline need not apply when the market is ending a fifth wave at more than one degree, yet the action in Figure 5-5 (see above reference) suggests that we should still view this level as at least potential or temporary support. free forex signals presents special offer open trading account with one of the best forex brokers and GET FREE forex Signals via SMS, Email and WhatsApp SIGN UP FOR A FREE TRIAL To Access FREE Forex Signals in the Members Area START FREE 30 DAYS TRIAL on https://www.freeforex-signals.com/
  2. The Broad Concept - Elliott Wave Principle free forex signals presents special offer open trading account with one of the best forex brokers and GET FREE forex Signals via SMS, Email and WhatsApp SIGN UP FOR A FREE TRIAL To Access FREE Forex Signals in the Members Area START FREE 30 DAYS TRIAL on https://www.freeforex-signals.com/ The Elliott Wave Principle — A Critical Appraisal, A. Hamilton Bolton made this opening statement: As we have advanced through some of the most unpredictable economic climate imaginable, covering depression, major war, and postwar reconstruction and boom, I have noted how well Elliott’s Wave P In rinciple has fitted into the facts of life as they have developed, and have accordingly gained more confidence that this Principle has a good quotient of basic value. In the 1930s, Ralph Nelson Elliott discovered that stock market prices trend and reverse in recognizable patterns. The patterns he discerned are repetitive in form but not necessarily in time or amplitude. Elliott isolated five such patterns, or "waves," that recur in market price data. He named, defined and illustrated these patterns and their variations. He then described how they link together to form larger versions of themselves, how they in turn link to form the same patterns of the next larger size, and so on, producing a structured progression. He called this phenomenon The Wave Principle. Although it is the best Forex Signals tool in existence, the Wave Principle is not primarily a Forex Signals tool; it is a detailed description of how markets behave. Nevertheless, that description does impart an immense amount of knowledge about the market’s position within the behavioral continuum and therefore about its probable ensuing path. The primary value of the Wave Principle is that it provides a context for market analysis and FREE Forex Signals . This context provides both a basis for disciplined thinking and a perspective on the market’s general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable. Many areas of mass human activity display the Wave Principle, but it is most popularly used in the stock market. Truly, however, the stock market is far more significant to the human condition than it appears to casual observers and even to those who make their living by it. The level of aggregate stock prices is a direct and immediate measure of the popular valuation of man’s total productive capability. That this valuation has form is a fact of profound implications that will ultimately revolutionize the social sciences. That, however, is a discussion for another time. R.N. Elliott’s genius consisted of a wonderfully disciplined mental process, suited to studying charts of the Dow Jones Industrial Average and its predecessors with such thoroughness and precision that he could construct a network of principles that reflected all market action known to him up to the mid-1940s. At that time, with the Dow near 100, Elliott predicted a great bull market for the next several decades that would exceed all expectations at a time when most investors felt it impossible that the Dow could even better its 1929 peak. As we shall see, exceptional stock market forecasts, some of pinpoint accuracy years in advance, have accompanied the history of the application of the Elliott wave approach. Elliott had theories regarding the origin and meaning of the patterns he discovered, which we will present and expand upon in Chapter 3. Until then, suffice it to say that the patterns described in Chapters 1 and 2 have stood the test of time. Often one will hear several different interpretations of the market’s Elliott wave status, especially when cursory, offthe- cuff studies of the averages are made by latter-day experts. However, most uncertainties can be avoided by keeping charts on both arithmetic and semilogarithmic scale and by taking care to follow the rules and guidelines as laid down in this book. Welcome to the world of Elliott.
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