Practical use of Elliott Wave analysis

[sinner]

I'd be interested in getting an update on the XAO count tech, how does it change from here?
Assuming today doesn't selloff by a couple of percent before the close, the earlier one would now be invalidated wouldn't it

The most obvious count alteration (I do it in my head rather than using software so maybe it isn't good enough for you) is like this:

Old count:


Invalidated during todays trading. So I go back one impulsive, to the last fully completed count, including the new information:



So we have five impulse up completed, A-B-C down completed, and that would make the current wave proposed as wave 1 of the next impulse up in progress or nearing completion. Once a valid swing high is in place, looking for a retracement which does not exceed the end of wave C/proposed wave 1 low.

Then, aggressive traders looking to use PA triggers around the bottoms of this retracement (or proposed wave 2) to enter with stops just below the proposed wave 1 low. Conservative traders looking to trade longs on a break of the wave 1 swing high with stops at the proposed wave 1 low, using fib exts and confluence of prior fib retracements as target zones.

Like I said, my counting is rudimentary styles as I'm not trying to forecast, but it has always been an extremely useful tool in defining parameters to keep you in the trend. Many traders use EW likes this it seems and I am very happy with the results. In some cases (GBPUSD decline Jan-Jun 2010 anyone?) I had the whole move mapped out and posted on the net months in advance (I can chase my posts from forexfactory if you are curious) and it followed the whole thing perfectly. But that perfect count itself, was the direct result of an invalidated count. i.e. I said oops a wave 1 low has been exceeded, count is wrong, new parameters required!

P.S: The sign that made me personally think the "old count" would lead to a new impulse down, was that the retracement off highs exceeded the previous wave 4 low (as shown in second chart) rather than finding obvious support there.

 

[skc]

Invalidated during todays trading. So I go back one impulsive, to the last fully completed count, including the new information:

View attachment 42139

So we have five impulse up completed, A-B-C down completed, and that would make the current wave proposed as wave 1 of the next impulse up in progress or nearing completion. Once a valid swing high is in place, looking for a retracement which does not exceed the end of wave C/proposed wave 1 low.

Questions please...

How do you know that the current wave 1 is near completion? Is there a level where it will typically end?

What if we impulse down and take out the low of Wave C? How would you label the count then?

Thanks.

 

[mazzatelli]

Like I said, my counting is rudimentary styles as I'm not trying to forecast, but it has always been an extremely useful tool in defining parameters to keep you in the trend.

Not to derail the thread, have you ever looked at variance ratio tests for the same usage?

 

[sinner]

Questions please...

How do you know that the current wave 1 is near completion? Is there a level where it will typically end?

What if we impulse down and take out the low of Wave C? How would you label the count then?

Thanks.

Good questions!

1. Use fib retracements and interaction with MAs to determine state "near completion"/typical ending levels but personally won't label it as complete until a valid swing high is in place, preferably with a key reversal or similar price action at the swing high. I know AGET and the software Boggo uses both use "max/min" settings based on fib retracement/expansion numbers of various magnitude swings.

But for me, once the swing high is in place I will start looking for price action and support between that swing high and wave 1 low to confirm. It won't always! Which leads to...

2. If we swing heavy down from here and break the low I would still view the 1-2-3-4-5 impulse up of that second chart as valid, and place us in a "complex or irregular correction". So the A-B-C down is still valid, but there might be legs -X-D-E-F to go or we might be going into some sort of broadening consolidation pattern, and because complex Elliott counts are beyond me I would use breakout of a standard deviation channel from the absolute swing high (end wave 5/proposed wave A high) to absolute swing low (proposed wave F low which obviously isn't on the chart yet) before taking any new trades.

It happens.

 

[skc]

...It happens.

Thank you.

 

[sinner]

Not to derail the thread, have you ever looked at variance ratio tests for the same usage?

Far out man, we can't all be genius like you!

Again just like my EW counts, I use something like this, but in a very rudimentary fashion, i.e. it's not even computed as variance, I just visually looking at the short vs long intervals. I don't want to say exactly what the lines below are as they are of my own invention and I like them a lot, but I am sure you could figure it out and they sprung to mind immediately as I saw your question

The top is "long term" bottom is "short term" equivalents of what you might plug into the variance ratio equation, on BHP. For the purposes of not derailing the thread, I set the long term to n=34 and short term n=5, to match the Elliott Wave use of fib numbers

 

[Boggo]

The most obvious count alteration (I do it in my head rather than using software so maybe it isn't good enough for you) is like this:

Got to catch a flight soon so just a quick response.

The potential ABC on the first chart on this post is still intact (ie. 4931), tomorrow may be a significant day.
https://www.aussiestockforums.com/forums/showthread.php?t=4888&p=621986&viewfull=1#post621986

 

[coolo]

The way I see it, today's price action completes a ZigZag correction from 17/03.

I expect to see XAO come off at least 500 points in the next month.

Just my 2

coolo

 

[professor_frink]

Sinner, Boggo, thanks for the update on things

 

[Sean K]

The way I see it, today's price action completes a ZigZag correction from 17/03.

I expect to see XAO come off at least 500 points in the next month.

Just my 2

coolo

So, using EW you are short at this point. Tell us when you close the trade.

 

[sinner]

So, using EW you are short at this point. Tell us when you close the trade.

Personally I didn't feel like coolos post matched with the thread title or attempts by various members to try and elucidate but didn't want to offend or confront either.

Apparently short, with no parameters, stoploss levels, takeprofit levels (except "500 points in the next month"), etc. Unfortunately I don't even understand his count, but that wouldn't be the first time I couldn't grasp an EW count.

 

[coolo]

OOOPS!!!!.....sorry to intrude........just happened to re-discover this forum after registering a long time ago.

I don't normally follow XJO but thought that I'd do a quick wave count & the chart posted was my attempt to see where the OZ market was positioned. It was a quick count & even detailed counts ain't necessarily correct.

Elliott waves are fractals & you can never be sure that you have the count nailed. They are all variations of the same 3/5 wave pattern. A coastline is a fractal & if viewed from 100m, 1km, 10km or 100km or from the moon....it still looks like a coastline. You can never be sure that what you think may be the headland that will change the direction of the coastline is really in view at the elevation from which you are viewing.

However, there are some safeguards. A new trend....be it from the end of an impulse to the start of the 3-wave correction OR the end of the correction to the beginning of a new 5-wave impulse....will always start with an impulse (as wave 1 of an impulse in the new direction or as wave A of the correction) & will always be followed by another impulse after the wave 2 (or wave B) correction.

So.....if you can confirm that the change of direction STARTS with an impulse followed by a 3-wave correction, another impulse will follow........& trade that impulse.



@Kennas.........No I'n not short yet as market action today appears to be waves 1-4 of a leading diagonal.....wave 4 has already overlapped wave 1.... which could morph into a zigzag & continue the up-trend. I only trade if I see a difinitive 5-wave impulses that are followed by 3-wave corrections & look to take my money after the next impulse has reached 100% of the length of wave 1. The stop is placed 1 point beyond the start of wave 1.

@sinner......the first impulse down from Feb to mid March was 500 points . That's the target.

Again......sorry for being off topic...............happy trading!!

coolo

 

[Boggo]

Follow up to my post on the 26th, I am going to stay with how I saw it then based on a potential ABC until it closes above 4931.
https://www.aussiestockforums.com/forums/showthread.php?t=4888&p=621986&viewfull=1#post621986

Next sequence should it close above 4877 would be to call all of the last down leg a wave A and the current up leg to be a wave B.
For that to be valid this uptrend cannot close above 4931 which is the 0.786 retracement of wave A and the theoretical limit for a wave B.

(click to expand)

 

[Sean K]

Elliott waves are fractals & you can never be sure that you have the count nailed. They are all variations of the same 3/5 wave pattern. A coastline is a fractal & if viewed from 100m, 1km, 10km or 100km or from the moon....it still looks like a coastline. You can never be sure that what you think may be the headland that will change the direction of the coastline is really in view at the elevation from which you are viewing.

Any TA is within a time period and chart scales.

A daily chart over a one month period will look different to a yearly chart over the same time.

You may get the point.

This is a 'practical use of EW analysis', not what might have been.

Post a buy/sell based on EW.

Followed by a sell/buy.

Then we can see how it's applied.

 

[tech/a]

Kennas

You dont have to trade pure E/W signals to apply it practically.
A few here Boggo and myself use Elliott in a practical way buy adding it to our analysis tool box.

As Ive said before having an idea where you are in a chart ---as in its life of price movement--gives you a sound basis from which to base your trading.
Ive pointed out above how I do it.

Specifically the XJO is in a cautionary area of topping and until proven otherwise trading the XJO should be treated as such---with caution to the long side.

For those and I believe your in the group of those---who expect a point of analysis to be finite and fixed from point of analysis forward---you will be constantly disappointed---not only with Elliott but with EVERY form of analysis including fundamental.The goal posts move constantly and we can only trade in anticipation of our analysis.It will be right or wrong.
We must know how to trade when its right and when its wrong.
TRUE OF ALL ANALYSIS.

 

[Boggo]

Kennas

As Ive said before having an idea where you are in a chart ---as in its life of price movement--gives you a sound basis from which to base your trading.
Ive pointed out above how I do it.

The goal posts move constantly and we can only trade in anticipation of our analysis.It will be right or wrong.
We must know how to trade when its right and when its wrong.

kennas, below is an example of what tech/a is saying.
I entered this (ALK) on a breakout but 'could see' the potential pattern that might play out and the potential targets points along the way if it followed the rules.
https://www.aussiestockforums.com/forums/showthread.php?t=4382&p=612696&viewfull=1#post612696

I know that this stock is now at another area where it may reverse and when it does I can plot the areas that it is likely to retrace to and if it follows a predictable pattern I can re-enter and extract some more from it.

In the current market it seems harder than normal to apply EW on its own but it is still a very valuable tool.
Have a look at the posts on here for an example of buying blindly and then not knowing what next when it comes to targets or exits.
https://www.aussiestockforums.com/forums/showthread.php?t=22341

Current state of ALK. (click to expand)

 

[Boggo]

One example of my process when looking for EW candidates.

I get MTPredictor to do four scans, and intermediate and major of both the ASX300 and of the ASX Metals & Mining sector.

I the eyeball the results looking for good looking setups, the software just follows a programmed routine so it is up to me to know what may be useful.

I have attached last night's intermediate scan of the ASX300 below, note that there are no buys, market barometer perhaps.
I haven't looked at any of these results, not sure if there is anything of value there (something for kennas to do )

I have also attached two charts of NCM, one from MTPredictor where it picked up a perfect ABC (TS3 blue = Long) and also a chart from Metastock.

Note the areas I have highlighted and in particular note the potential buy signals near the top on the Metastock chart.
Looking at the MTPredictor chart it becomes obvious why you would ignore those signals, this is what tech/a is explaining about knowing where you are in the life of a stock.

Also on the MTPredictor chart of NCM you can see what the different scan results may look like on a chart (Red = Short and Blue = Long).

(click to expand)

 

[tech/a]

Thanks Boggo

Exactly.

Nicely explained.

 

[tech/a]

And so here we are at the turn (I do think that analysis points to this as a significant point of reference.)

I will be shorting indexes Monday
Ive already culled weak stock.
New long positions will be eyed very carefully.

If all pans out looking for good corrective patterns will be my aim in the nearer future.

Click to expand.

 

[Sean K]

And so here we are at the turn (I do think that analysis points to this as a significant point of reference.)

I will be shorting indexes Monday
Ive already culled weak stock.
New long positions will be eyed very carefully.

If all pans out looking for good corrective patterns will be my aim in the nearer future.

Click to expand.

View attachment 42336

Tech, we went up yesterday, so does that indicate a potential breakout, or need to give it a confirmatory leg up?

If that wasn't the top of 3 then with EW do you just continue to wait for the confirmed top before shorting again?

Or, does moving through this zone completely change the count to something more complex?