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Chapter 16, Part II. Major EW patterns – Impulse move.

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, Sep 13, 2011.

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  1. Administrator

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    Part II. Major EW patterns – Impulse move. [​IMG]
    Commander in Pips: So, it’s time get back to work, tighten your belt and get started. Today we will talk about major EW patterns, which are an impulse move and a corrective move. Both of these moves Mr. Elliot called “waves”, so we will follow to this definition.

    Elliot’s work tells us that a trending market moves in 5-3 wave pattern. First a 5 wave pattern is called “impulsive”, while the last 3 wave pattern is called “Corrective”.

    So let’s take a look at the picture first, since it will be easier to explain it:


    [​IMG]

    In this pattern 1, 3 and 5 “green” waves are leading or so called “Motive”. They call like that because they go together with the major trend, while 2 and 4 “black” waves are corrective. But do not mess up 2 and 4 corrective waves with ABC corrective pattern that we will discuss in later parts of this chapter. While ABC is a corrective pattern that follows an Impulse move, the 2 and 4 waves are corrective moves inside the Impulse move itself.

    Pipruit: Hm, I’m hardly understanding what you’re talking about. But I hope that it will become clear later on. But Commander, why did Mr. Elliot think that market trending, or “impulse” move develops precisely or as usual with such pattern?​

    [​IMG]
    Commander in Pips: Well, actually this kind of developing of overall market sentiment is very logical. And to make it clear for you also, let’s pass through market mechanic of each wave, as we did in previous chapters with other patterns:

    Wave 1

    This is initial move up. It happens just because number of investors/market participants thinks that some currency or asset (if you will apply it to other markets, say, commodities) is undervalued and should rise during the nearest time. The number of traders, who think like that relatively small, and their thoughts about reasons for such growth could be absolutely different – fundamental, technical or imagined. This leads some currency to slight growth, which is wave 1.

    Leading Diagonal

    This type could takes place in a position of 1st wave, although you will not see it very often. That’s why it calls “leading”. It will be simpler if I just give you the picture:


    [​IMG]
     
    #1 Administrator, Sep 13, 2011
    Lasted edited by : Apr 10, 2016
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