Practical use of Elliott Wave analysis

[Boggo]

I have quickly grasped an example to chart below, there are better and many similiar examples but this is a recent one.

As I mentioned it was just a quick glance and manual plot, more an attempt to explain how EW can be used in this case with a breakout rather than a perfect example of EW.
PEN and both the XAO and XJO are better examples maybe of where 5 waves have played out and a correction is now abiding by the rules.
There are numerous charts in this situation at the moment.

Boggo great to see some live charts.

(Must say though, a book published x number of years ago is hardly live application. I could do that with any system in retrospect)

There are probably better examples being covered over the last few weeks on the XAO and PEN threads.
The reference to the book was never intended to be an example, it was a response to a query in post 2 of this thread.

On ELM Chart 2, it looks interesting but your W3 and 4 look pretty shaky to my untrained eye.

Won't we only know that they are 3 and 4 after its broken 3? And even then, the 4 is not lower than the Feb 25 low. Does that still fit the EW rules?

It is a bit untidy, W.4's usually are and in this case the W.4 I plotted didn't make it down to a 38.2 retracement, as I mentioned above it was a rushed example attempt to display how it can be used to answer the query in post #2.

Kennas.

Your doing a good job controlling your skepticism.

Boggo has come close in his labelling.(Hope you dont mind Boggo)
A GET's is a little closer I think.

Thanks tech/a, I always prefer that these are pointed out and I always like a second opinion.
The interesting bit is that MTPredictor auto routine won't plot either selection as a W.4 because (I suspect) neither retrace W.3 by 38.2, the ideal minimum retracement, it still has it in a W.3 with a minimum W.4 retracement target of $1.75 from today's high.

I have always thought that Kennas was a closet EW purveyor anyway

 

[tech/a]

I have always thought that Kennas was a closet EW purveyor anyway

Likes the analysis has seen it applied often enough to see its use---but cant get his head around how to use/apply it.

He's not alone---the ever changing wave counts (During recent price action) frustrates the hell out of those who cant work with fluid motion.
Yet once you understand it--its the easiest thing since learning how to walk.

 

[wayneL]

...those who cant work with fluid motion.

Eh?

Last time I looked, price action is the same whether or not an EW count is applied, ergo we all work with "fluid motion" in one way or another (with varying degrees of success).

ANY method is about your oft quoted and oft bolded APPLICATION. I'll bet even Gann can be applied successfully.... even indicators .

Speaking of Gann, your post here was rather Gannesque in its "you don't undersatnd", when all Kennas was asking was a demonstration of application in real time rather than a hundred calls, one of which will look prophetic in hindsight.

 

[ginar]

Eh?

Last time I looked, price action is the same whether or not an EW count is applied, ergo we all work with "fluid motion" in one way or another (with varying degrees of success).

ANY method is about your oft quoted and oft bolded APPLICATION. I'll bet even Gann can be applied successfully.... even indicators .

Speaking of Gann, your post here was rather Gannesque in its "you don't undersatnd", when all Kennas was asking was a demonstration of application in real time rather than a hundred calls, one of which will look prophetic in hindsight.

dejavu with me also wayne , i see EW about as useful as gann . Yet to see one mainstream EW practitioner get a decent handle on market , all this predictive rubbish has scam written allover it . im sure tech is going to point out his xao musings to us all now and tell us how good we arent . hows that for prediction

 

[professor_frink]

Re: Practical use of Elliott analysis

Hi tech,

I have a couple of questions in regards to the way that EW is applied. Whilst I can fully appreciate that counts evolve over time, the actual application of this side of things has me a little lost.

A couple of examples to illustrate my issues with it:

From July 2009:

On the 10th July:



This opinion you've expressed above ties in with the chart you posted in the XAO analysis thread(post 6565), which was labelling that current correction as the start of a wave 5 down to new lows in the context of the 07-08 bearmarket.


And then at the end of that month you highlighted that the 14th of July was the end of an ABC correction:



So based on what you've said in those posts, the count has obviously changed in those 2 trading days, but what I can't wrap my head around completely is where a count can change so drastically, from a new leg down in a once in a generation bear market to a small ABC correction in an ongoing rally.

What are the triggers that can change a count so drastically, and how would it be applied in real time?

Bump...

 

[luke256]

Yet to see one mainstream EW practitioner get a decent handle on market , all this predictive rubbish has scam written allover it.

A lot of those EW practioners are using it only to forcast rather than intergrate it into a practical trading system.

Example: If your software shows a wave 4 retracement then you should trade when it shows the trend has turned back up. Don't just buy the first time the program flashes "WAVE 4". IMO EW works best when you have a mechanical entry after the price moves up from the specified retracement level.

 

[professor_frink]

A lot of those EW practioners are using it only to forcast rather than intergrate it into a practical trading system.

Example: If your software shows a wave 4 retracement then you should trade when it shows the trend has turned back up. Don't just buy the first time the program flashes "WAVE 4". IMO EW works best when you have a mechanical entry after the price moves up from the specified retracement level.

If that is the case, then why bother with EW at all? Just wait for a higher low to form and then start buying the minor breakouts of the dips

 

[tech/a]

Re: Practical use of Elliott analysis

Bump...

Sorry Prof

I forgot about this question
Im out to dinner tonight but should get sometime to refresh my analysis and explain.

 

[professor_frink]

Re: Practical use of Elliott analysis

Sorry Prof

I forgot about this question
Im out to dinner tonight but should get sometime to refresh my analysis and explain.

no worries tech

 

[tech/a]

Re: Practical use of Elliott analysis

no worries tech

I can clearly see the issue.

Had a bit of a look over it (your specific charts and dates) to familiarise myself again.
Its a good question Prof and one 90% of people ask and it wasnt handled at all in the exchange at the time.

It will be important for all those who are not familiar with Elliott (Infact all technical analysis) to have a clear concise answer which everyone can understand.

I WILL actually be able to deliver that sometime tonight.
It should help many--not only with Elliott but with ALL analysis.

 

[luke256]

If that is the case, then why bother with EW at all? Just wait for a higher low to form and then start buying the minor breakouts of the dips

I find it useful to use the EW structure to see the markets position. If it was in the process of a wave 4 retracement, i'd be waiting for a signal to go long and would not take short trades. That way i'm am trading with the main trend. One the other hand if the EW was indicating another move down i wouldn't be looking to buy on the dips.

I find the EW ties in well with Gann's 'sections of the market'. Gann said that bull markets generally have 3 to 4 up sections. I can easily see the sections on my software using EW tool.

 

[professor_frink]

I find it useful to use the EW structure to see the markets position. If it was in the process of a wave 4 retracement, i'd be waiting for a signal to go long and would not take short trades. That way i'm am trading with the main trend. One the other hand if the EW was indicating another move down i wouldn't be looking to buy on the dips.

I find the EW ties in well with Gann's 'sections of the market'. Gann said that bull markets generally have 3 to 4 up sections. I can easily see the sections on my software using EW tool.

you've basically just repeated your earlier post without answering my question.

It's perfectly reasonable to want to trade with the main trend.

My point was that by the time the market gets to the point where it would be labelled a wave 4, it's blindingly obvious that the market is in an uptrend and that in order for you to continue trading with the trend the next one you take should be long.

EW used in this context is a fairly pointless exercise.

 

[Boggo]

If it was in the process of a wave 4 retracement, i'd be waiting for a signal to go long and would not take short trades.
I can easily see the sections on my software using EW tool.

Definitely no short trades at W.4, however W.5 is a different story and that point can be predicted (see XAO banter thread), but to know where W.5 is you need all the steps up to it.

Quite often you see the W.4 and then everyone jumping in on the breakout with the resumption of the (soon to correct itself) trend.
Look at IGO on the XAO Banter thread, there was 49c in W.5 if you nailed it perfectly without slippage or fees.

The trend is one thing, don't fight it, but you need to know more about where you are in the smaller picture than what a long term EMA may provide.
(you may note that there is a shorter term 34 period EMA on most of my charts)

What do you make of this one luke256, it may be one that you like ?
(click to expand)

 

[Boggo]

My point was that by the time the market gets to the point where it would be labelled a wave 4, it's blindingly obvious that the market is in an uptrend and that in order for you to continue trading with the trend the next one you take should be long.

EW used in this context is a fairly pointless exercise.

So would you have gone long on IGO based on that theory just because its in an uptrend ?
Not disagreeing with you, just wondering how you determine that the correction is complete and a new uptrend has resumed and where you might enter.

 

[professor_frink]

So would you have gone long on IGO based on that theory just because its in an uptrend ?
Not disagreeing with you, just wondering how you determine that the correction is complete and a new uptrend has resumed and where you might enter.

IGO??

 

[Boggo]

Quite often you see the W.4 and then everyone jumping in on the breakout with the resumption of the (soon to correct itself) trend.
Look at IGO on the XAO Banter thread, there was 49c in W.5 if you nailed it perfectly without slippage or fees.

IGO used as an example in previous post above.

 

[mytoniix]

I WILL actually be able to deliver that sometime tonight.
It should help many--not only with Elliott but with ALL analysis.

If its not too much to ask...
Could you take us through comprehensively the other analysis' so I can get a clearer picture on how you use EW in your decision making process.

 

[professor_frink]

IGO used as an example in previous post above.

I'm gathering you are talking about a stock code here The one above is PRR?

If you are talking about an individual company I wouldn't have a clue, I mainly trade indices.

Feel free to point out an index and I'll throw an opinion out there for it.

EDIT: sorry Boggo, I just saw the edit you made on the post. Will go and have a look

 

[Boggo]

I'm gathering you are talking about a stock code here The one above is PRR?

If you are talking about an individual company I wouldn't have a clue, I mainly trade indices.

Feel free to point out an index and I'll throw an opinion out there for it.

EDIT: sorry Boggo, I just saw the edit you made on the post. Will go and have a look

Sorry Prof, not very clear on my part, trying to do about six things at once here.
The point I am trying to make is that there is a definite advantage in knowing where any tradeable instrument is in its cycle and I was using the IGO chart on another thread as an example of where you can get caught out by expecting the uptrend to just resume and repeat itself.
Cheers.

 

[professor_frink]

So would you have gone long on IGO based on that theory just because its in an uptrend ?
Not disagreeing with you, just wondering how you determine that the correction is complete and a new uptrend has resumed and where you might enter.

It's a little hard to say with any kind of precision, I don't have data for IGO, know what sector it's in, etc.

The end of that W4 in the IGO chart looks to me to be pretty well around the time I was talking about getting long the ES(here), so it's a possibility.

I've shown a few examples of type of analysis I do in this thread if you are interested in the types of signals I take:

https://www.aussiestockforums.com/forums/showthread.php?t=20000

If you want some relevant examples of the types of entries of I take then I'll go and dig up some past posts from the past 6 months and highlight them in a chart later tonight.

I really have no business commenting on the IGO chart with any kind of credibility. I'd never even heard of it before today