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Thread: Using Elliot Wave Theory to Analyze the Stock Market

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    Default Using Elliot Wave Theory to Analyze the Stock Market

    Some market technicians that use technical analysis to look for a nearing market bottom or market top have noticed over the past several years that the stock market will consistently move in a 5 wave pattern which is based on concepts from Elliott Wave Theory. When the stock market is trending upward a 5 wave pattern consists of 3 separate moves upward and 2 separate moves downward before a top occurs. Meanwhile when the stock market is trending downward a 5 wave pattern consists of 3 separate moves downward and 2 separate moves upward before a bottom occurs.

    Lets take a look at the Nasdaq and S&P 500 and analyze their one year charts using concepts from Elliot Wave Theory. Notice how both the Nasdaq and S&P 500 made a bottom in late July of 2002 (points A) and then made 3 separate moves upward (A to 1, 2 to 3 and 4 to 5) followed by 2 separate moves downward (1 to 2 and 3 to 4) before topping out in late August after completing a 5 wave pattern.

    Now notice what happened from late August until early October of 2002 as the Nasdaq and S&P 500 made 3 separate moves to the downside (5 to 1, 2 to 3 and 4 to 5) and 2 separate moves to the upside (1 to 2 and 3 to 4) before making a bottom in early October after completing a 5 wave pattern.

    Meanwhile lets continue using Elliot Wave Theory an trace out the 5 wave pattern from early October of 2002 until early December of 2002 when the stock market made a top. Notice there were 3 separate moves to the upside (5 to 1, 2 to 3 and 4 to 5) and 2 separate moves to the downside (1 to 2 and 3 to 4) as well.

    After the Nasdaq and S&P 500 topped out in early December they formed another 5 wave pattern as they made a bottom in mid March of 2003. Once again there were 3 downside moves (5 to 1, 2 to 3 and 4 to 5) and 2 upside moves (1 to 2 and 3 to 4) before the 5 wave pattern was completed in mid March.

    Now Im not an expert in Elliot Wave Theory but it looks to me that the Nasdaq and S&P 500 may be nearing the completion of another 5 wave pattern with a potential stock market top coming into play. Notice there have been 3 upside moves (5 to 1, 2 to 3 and 4 to 5) and 2 downside moves (1 to 2 and 3 to 4) since mid March through late May of 2003.

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    I am ever hear big name of Elliot Wave System.

    Anyone can explain how to determining wave 1...wave...2....etc, with most accurate.

    Thanks

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    Quote Originally Posted by mukhsyeen View Post
    Anyone can explain how to determining wave 1...wave...2....etc, with most accurate.
    No, I can't.

    Although the wave counting looks like suitable for forex, I feel that it's not applicable. Wave counting seems easier in bigger time frame charts. Noise in smaller time frame makes the counting more difficult.

    However most people prefer trading at short time span, like hours or at most days. And for this, smaller time frame (hourly or at most daily, some even prefer minutely charts) is more pratical. So, wave counting seems rather less useful.

    But partial wave counting, ie. not looking too far to the past, might be useful.

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    http://www.elliottwave.com/education...=789&lesson=21

    ini cikgu EW aku paling best. aku hari2 buka, dengar ulang2. sila cuba.

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    Quote Originally Posted by zaberi View Post
    http://www.elliottwave.com/education...=789&lesson=21

    ini cikgu EW aku paling best. aku hari2 buka, dengar ulang2. sila cuba.
    Terima kasih cikgu informasi linknya...

    Adakah bisa liat EW guna indicator liat wave 1..mave2..etc.

    Sesiapa ikhlas upload indicator EW kat sini...

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