elliott wave principle - cmt association wave truncation alternation ... in the 1930s, r.n. elliott...
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MTA Webinar
Presenter:Mr Ashish Kyal (CMT) Ashish Kyal is the Founder / Director of Waves Strategy Advisors
Pvt. Ltd.
He is a Chartered Market Technician. He has extensively written for Global assets including Equities, Bonds, Agro Commodities, Metals, Alternative Energy, across multiple time frames
He has worked for leading investment banks like Lehman Brothers / Nomura Holdings
He is a frequent speaker on Business Channels like CNBC TV18 and Zee Business. He has also been a guest speaker at host of management colleges and frequently speaks at financial seminars
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Topics BASIC PATTERN EXTENSIONS 5TH WAVE TRUNCATION ALTERNATION WAVE EQUALITY CHANNELING
PRICE & TIME CONFIRMATION
DAIGONAL CORRECTIVE WAVES
• ZIGZAG • FLAT • TRIANGLES • COMBINATION
WAVE CHARACTERISTICS RATIO ANALYSIS
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History In the 1930s, R.N. Elliott discovered that the stock market moves in recurring patterns that he called waves. He formulated the Wave Principle based on these wave patterns
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The Fibonacci Series 1,1,2,3,5,8,13,21,34,55,89,144………..
The Golden Ratio 1.618
Fibonacci is used for Retracements & Projections
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Impulse Pattern It is structured as (5-3-5-
3-5 ) It can be upside or
downside It is labeled as 1-2-3-4-5
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Important Rules Wave 2 cannot retrace complete of Wave 1. Advanced
concept suggests wave 2 cannot retrace more than 61.8% of wave 1
Wave 3 cannot be shortest of Waves 1,3 and 5 Wave 4 cannot enter into the territory of Wave 1
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Extensions When wave 3 is
extended, then wave 1 and wave 5 tends towards equality
The extended wave itself is 5 waves internally
Wave 4 will normally not retrace more than the central power area of extended wave
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Ending Diagonal It is structured as (3-3-3-
3-3) It is similar to Wedge
pattern It can occur in Wave 5
and Wave C Breakout on downside
will retrace complete up move of Wave 5 in ½ or ¼ time
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Truncation If wave 5 does not move
above wave 3 then wave 5 is called to be truncated
Wave 5 is internally an
impulse wave
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Channeling Technique
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Channeling Technique
Corrections Correction should take more time than preceding
waves. There are three basic types of standard correctives: 1. Zigzag 2. Flat 3. Triangle
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ZigZag It is structured as (5-3-5) Wave B will not travel
more than 61.8% of wave A
Wave C should move beyond the end of wave A
Truncation cannot happen in wave C in case of Zigzag
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Regular Flat It is structured as (3-3-5) Wave C will most
probably move beyond end of wave A which can be equal to 0.618-1.618 times of Wave A
Wave B should retrace atleast 61.8-100% of wave A
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Irregular Flat Wave b should be
between 100% to 161.8% of wave a
If wave b is more than
138.2% of wave a then we might see irregular flat failure pattern
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Running Flat If wave c does not move
below the start of wave a then it is said to be running flat
Running Flat has very strong post pattern implication
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Triangle It is structured as (3-3-3-
3-3) Each segment in triangle
is corrective At least 3 segments
correct more than 50% of previous wave
Triangle can drift upward or downward
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Alternation Alternation can occur in following ways: Price: for example - wave 2 = 100 points, wave 4= 50 points
Retracement: for example - wave 2 = 61.8%, wave 4= 38.2%
Complexity: for example - wave 2= complex, wave 4 = simple
Time: for example - wave 2 = 10 days, wave 4 = 5 days Wave 2 and wave 4 will always tend towards alternation
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Combination
Double Flat Zigzag + Flat
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Flat + Triangle
Double Flat Correction
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Triple Combination
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Flat + Flat + Triangle
Zigzag+ Flat + Triangle
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2 Stage Confirmation 2-4 trendline should be
broken in faster time than wave 5 took to form
Wave 5 should be retraced completely in faster time
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2 Stage Confirmation 0 –b trendline should be
broken faster than wave c took to form
Wave c should be retraced completely in faster time
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