84074990 4590219-elliot-wave
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84074990 4590219-elliot-wave






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84074990 4590219-elliot-wave 84074990 4590219-elliot-wave Presentation Transcript

  • Demystify Technical AnalysisTechncial Analysis
  • Agenda Trading Techniques • Using RSI • Using Moving Averages • Using Stochastic . • Using Bollinger Band • Using Composite and Index performance rebasing • Using Seasonal Charting Elliot Wave . • Basic Pattern. • Motive and corrective Wave • Complete Wave structure • Wave degree • Degree • Trading Style • View on the market2 Technical Analysis
  • Trading Stratergy Using MA and RSI3 Technical Analysis
  • Using MA Cross Over.4 Technical Analysis
  • Using Stochastic for Jobbing/ Fast Trading.5 Technical Analysis
  • Index Performace Rebasing ( Relative Strenth )6 Technical Analysis
  • Index Performance / Rebalancing7 Technical Analysis
  • Seasonal Charting8 Technical Analysis
  • Elliot Wave9 Technical Analysis
  • Basic Pattern Market moves in 5 waves. Directional Wave : Wave 1 , Wave 3 and Wave 5 Countertrend Interruption : Wave 2 and Wave 410 Technical Analysis
  • Elliot Wave Developed by Ralph Nelson Elliot. “ Elliot wave does not predict the market. It just helps you to understand in which state our Market is “ • Robert Prechter “ Elliot wave is idiot Wave.” “If you want to take revenge on your enemy teach him Elliot Wave.”  Vishal Mehta11 Technical Analysis
  • Motive and Corrective Wave Motive Wave : Motive wave has the direction which impels the market in one direction , the movement Motive Wave comes in 5 wave structure . Corrective Wave : Corrective wave It has 3 wave structure .12 Technical Analysis
  • Complete Wave cycle structure13 Technical Analysis
  • Wave Degree WAVE DEGREE All waves may be categorized by relative size, or degree. Elliott discerned nine degrees of waves, from the smallest wiggle on an hourly chart to the largest wave he could assume existed from the data then available. He chose the names listed below to label these degrees, from largest to smallest: Grand Supercycle Supercycle Cycle Primary Intermediate Minor Minute Minuette Subminuette14 Technical Analysis
  • Degree Notation Table15 Technical Analysis
  • Impulse Pattern , How they are developed Wave 1 is usually weak rally with only small percentage of traders participating . Once Wave 1 is over, they sell market on Wave 2 . The sell of Wave 2 is very vicious . Wave 2 will finally end without making new lows and market will turnaround for another rally.16 Technical Analysis
  • Wave 3 Initial Stage of Wave 3 rally is slow and finally makes it to top of prvious rally ( Top of Wave 1 ) . Lots of Stops are placed above Wave 1 . Traders are not convienced about the upward trend and use this rally to add more shorts . For their analysis Wave should not cross above previuos rally . So everybody puts their stop loss above Wave 1 top.17 Technical Analysis
  • Wave 3 in Progress Once top of Wave1 is taken out Wave picks up the steam. As top of Wave1 is breached lots of stops are taken out and depending on the stops levels there would GAPS left. Ideally Gaps are good indication of beginning of Wave 3 .18 Technical Analysis
  • Wave 3 in Full Swing Trader who were long from the bottom has something to cheer about and add to their long position. Traders who are unhappy being stopped out, decide the trend is up and starts going long . This adds the fuel in Wave 3. CNBC, All analysts talk about good economic health and good Technical Picture.19 Technical Analysis
  • Wave4 Wave 3 buying dries and Wave 3 comes to halt. Profit taking now sets in. Traders who were long from the lows and will decide to take profit. Others traders start to lock in profit. This causes pull back is called Wave 4. Wave 2 is usually vicious sell of . Wave 4 is gradual profit taking.20 Technical Analysis
  • Wave 5 Considering the gradual profit. People still consider the market trend is up Buy in Wave 4 pullback. Wave 5 progress but lacks enthusiasm which was there in Wave 3. Ususally divergence is seen during wave 5.21 Technical Analysis
  • Elliot Wave Rules1. Wave 2 cannot retrace past the beginning of Wave 1.2. Wave 3 cannot be shortest of 3 impulse waves (1,3 and 5)3. Wave 3 cannot overlap or trade into territory of wave 1.If any of theses rules are violated, the wave structure as labeled is incorrect and must be reevaluated.22 Technical Analysis
  • Elliot Wave Rules23 Technical Analysis
  • Extension Extensions are elongated impulses with exaggerated subdivisions. The vast majority of impulse waves do contain an extension in one and only one of their three actionary subwaves.24 Technical Analysis
  • Use of Extension If Wave1 and Wave3 are about equal size then Wave 5 would be extended. if wave three extends, the fifth should be simply constructed and resemble wave one. In the stock market, the most commonly extended wave is wave 3. 25 Technical Analysis
  • How to find 5th wave Failure Early warning signals come for 5th wave failure when 4th Wave retraces deep as much as 50% of Wave1-3 or extreme of Wave 1 . If Wave 5 subdivide its self in 5 wave before completing the Wave cycle26 Technical Analysis
  • Truncation Elliott used the word "failure“ or “Truncation” to describe a situation in which the fifth wave does not move beyond the end of the third.27 Technical Analysis
  • Diagonal Triangles An ending diagonal is a special type of wave that occurs primarily in the fifth wave position at times when the preceding move has gone "too far too fast," as Elliott put it. A very small percentage of ending diagonals appear in the C wave position of A-B-C formations. Ending diagonals take a wedge shape within two converging lines, with each subwave, including waves 1, 3 and 5, subdividing into a "three," which is otherwise a corrective wave phenomenon. 28 Technical Analysis
  • Ending Diagonal29 Technical Analysis
  • Corrective Waves Specific corrective patterns fall into four main categories: Zigzags (5-3-5; includes three types: single, double, and triple); Flats (3-3-5; includes three types: regular, expanded, and running); Triangles (3-3-3-3-3; four types: three of the contracting variety (ascending, descending, and symmetrical) and one of the expanding variety (reverse symmetrical); Double threes and triple threes (combined structures).30 Technical Analysis
  • Zigzags (5-3-5) A single zigzag in a bull market is a simple three-wave declining pattern labeled A-B-C. The subwave sequence is 5-3-5, and the top of wave B is noticeably lower than the start of wave A. Wave B should come in 3 Waves and Wave A and Wave C comes in 5 Waves31 Technical Analysis
  • Flats (3-3-5) A flat correction differs from a zigzag in that the subwave sequence is 3-3-5 . Since the first actionary wave, wave A, lacks sufficient downward force to unfold into a full five waves as it does in a zigzag, the B wave reaction, not surprisingly, seems to inherit this lack of countertrend pressure and terminates near the start of wave A. Wave C, in turn, generally terminates just slightly beyond the end of wave A rather than significantly beyond as in zigzags. 32 Technical Analysis
  • ABC (3-3-5) Flat correction Correction begins with 5 Wave impulse pattern getting completed. Wave A is of 3 Waves, Wave B of 3 Waves and Wave C come sin 5 Waves. Wave B may test extreme of Wave 5. Wave C may test extreme of Wave A.33 Technical Analysis
  • ABC (3-3-5) Irregular Correction Wave A is of 3 Waves. Wave B Exceeds the extreme of Wave 5. Wave B is of 3 waves Wave C exceeds the extreme of Wave A and is of 5 Waves. 34 Technical Analysis
  • ABC (3-3-5) Running Correction Most trickiest one find as it looks like continuation of trend rather than correction into 5 wave sequence. It is very rare to find . A running correction implies strong continuation of trend following end of the correction. Wave A is very shallow correction. Wave B exceeds extreme of Wave 5. Wave C retraces the Wave B but does not exceed the extreme of wave A. 35 Technical Analysis
  • Triangles Triangles appear to reflect a balance of forces, causing a sideways movement that is usually associated with decreasing volume and volatility. Triangles contain five overlapping waves that subdivide 3-3-3-3- 3 and are labeled a-b-c-d-e. 36 Technical Analysis
  • Wave 3 Projection Wave 3 can be 100%, 162%, 262% of wave137 Technical Analysis
  • Corrective Wave 2 Wave2 tends to be simple ABC (5-3-5) Zigzag correction. Where Wave C exceeds extreme of Wave A. Wave 2 Cannot Exceed the Wave 1. Wave 2 usually retraces 50% of Wave1. Waves 2 usually does not exceed 78.6% of wave1. Wave 2 retraces less than 50% then wave 1 then Wave 3 will usually be extended.38 Technical Analysis
  • Trading Technique using Wave 2 Ideal strategy is to enter near completion of Wave2 arounf 50% or 78.6% wave 1 . Since 50% retracement we are minimum looking for Wave2 to retrace . Don’t enter before 50% of wave1. If market fails to reach 50% of wave 1 or retraces more than 78.6% of wave 1 then BUY breakout of Wave1. 39 Technical Analysis
  • Wave 4 Wave 4 should not trade in range of Wave1. Principal of alteration : If wave 2 was simple ABC correction then Wave4 will be complex correction. Wave4 usually retraces 23.6% or 50% of wave3 but not more than that, which gives us Minimum and Maximum target. Wave4 is usually in price equality of wave2 or 62% or 162% of wave2 40 Technical Analysis
  • Trading technique to trade Wave4 Buy at correction wave4. Most of the time Wave are complex correction we should wait for some time to clearly identify the patterns for time and price retracement.41 Technical Analysis
  • View on the Market42 Technical Analysis
  • Technical Analysis Chat Room South Asia43 Technical Analysis
  • Your Valuable Feedback  vishal.mehta@reuters.com  Vishal.sultania@reuters.com44 Technical Analysis
  • Thank you. After learning Elliot wave.45 Technical Analysis