Elliott Wave learning

[Dollar_McGavin]

Hi @TYGMedia,

@TYGMedia

I am feeling bored as well. After meeting online for whole days, I sit in my pool meditating, cooling down my head

Yupp, I’m sitting out in the sun having coffee!

@TYGMedia

EW is interesting topic. A lot hate and love are around it. 2-3 months ago, I was giving education about it. The beginner was excited, thought it was a holy-grail, while the more experience traders, but still have no profit, cursed and made arguments around it. Only few experienced trader appreciated it.

Yes, it’s a polarizing subject. I stopped using EW a while back ago, but personally know a couple pro traders that use it as a complementary analysis tool.

@TYGMedia

Event BP doesn’t give enough explanation about EW.

Yeah, not just EW, I think there is a lot on BP that is not explained properly.

@TYGMedia

The first thing to do before we use EW is locating equilibrium area or The Base.
Without knowing The Base, it’s impossible to allocate W1.

It’s been a while since I’ve done EW analysis, so mine was a bit quick and dirty.
But yes, you’re right about importance of identifying the correct starting point. Along with differentiating wave degrees, this is probably one of the hardest things for beginners to get right.

@TYGMedia

Differnt TF will have different base, LTF will give fast and weak base, while HTF will give stronger base. For beginner, easier to spot daily base, and this is the entry level for beginner to use EW.

Yes, agree 100%.

I personally found it easier to start with the largest dominant trend first, usually weekly or monthly and then work down to the LTFs.

[TYGMedia]

Hi @Dollar_McGavin

@Dollar_McGavin

It’s been a while since I’ve done EW analysis, so mine was a bit quick and dirty.
But yes, you’re right about importance of identifying the correct starting point. Along with differentiating wave degrees, this is probably one of the hardest things for beginners to get right.

Even you said, your is quick and dirty, your analysis is correct. Event we are split by ocean, our principle is the same

Here is my chart for XAGUSD. Reason is, there was valid base to initiate W1.

Hope you enjoyed your coffee …

[Dollar_McGavin]

Hey @TYGMedia

This is very interesting, we arrive at the same destination via different routes.

I’ll admit my EW analysis skills are a little rusty, it’s been awhile.

@TYGMedia

Here is my chart for XAGUSD. Reason is, there was valid base to initiate W1.

Nice!

Yes, EW is another form of cycles analysis. What you refer to as a valid base is what I would call a HTF cycle low, it follows the same basic principles.

[Margaretwantstotrade]

Wow I loved it actually thanks a lot So the first thing is that you find a valid base to start counting the waves?

[VasilTodorov]

Also i found this about eliot waves: Evidence Supporting Elliott Wave Theory
Anecdotal Success and Practitioner Use:
Many professional and retail traders use Elliott Wave analysis as part of their trading strategies, often citing its ability to identify trend direction, reversals, and key price levels. Prominent analysts, like Robert Prechter, have popularized its use through publications like Elliott Wave Principle.

In practice, traders often combine Elliott Waves with other tools (e.g., Fibonacci retracements, RSI) to refine entry and exit points, suggesting some perceived utility.

Behavioral Finance Alignment:
Elliott Wave Theory is rooted in the idea that market movements reflect crowd psychology, which cycles between optimism and pessimism. Behavioral finance studies support the existence of such cycles, as investors exhibit herding behavior, overreactions, and sentiment-driven price moves.

The fractal nature of waves (patterns repeating across different time frames) aligns with observed market self-similarity, lending theoretical plausibility.

Limited Empirical Studies:
Some studies have found evidence supporting specific wave patterns. For example, a 2010 study by Batchelor and Kwan examined Elliott Wave patterns in forex markets and found that certain wave counts had predictive power for short-term price movements, particularly in trending markets.

Research on Fibonacci ratios, often used with Elliott Waves to predict wave targets, has shown statistical significance in certain markets (e.g., equities and forex), suggesting that wave-based price targets may occasionally align with actual price behavior.

Self-Fulfilling Prophecy:

1. • Because many traders follow Elliott Wave patterns, their collective actions (e.g., buying at perceived Wave 3 peaks or selling at Wave 5 exhaustion) can create price movements that reinforce the patterns, at least in the short term.

[TYGMedia]

Hi @Margaretwantstotrade,

Yup, you have to find the correct base. You mostly have to start from D1 chart to find strong base. When there is breakout, it will be indication for W1. An EW can be confirmed after W3 is formed. But our position can be started from W2.

You have to learn the rule for W1-5. If the rule is broken, the EW will no longer valid.

Important Note:

EW is not about continuation. EW is about momentum. Thinking of EW inside EW will only bring complication.
EW and AMD are brother and sister. Knowing both of them will give complete feature of market dynamic. Understanding Price Action will be a perfection

[Margaretwantstotrade]

I guess I did understand it and I am thankful

[Dollar_McGavin]

Hey @TYGMedia,

Your reply sparked off a thousand different thoughts in my head.

@TYGMedia

Yup, you have to find the correct base. You mostly have to start from D1 chart to find strong base. When there is breakout, it will be indication for W1. An EW can be confirmed after W3 is formed. But our position can be started from W2.

Yes, EW is generally suited for larger (daily or higher) timeframes. It can be done on lower timeframes but isn’t always so clear without supplementary help:

@TYGMedia

Important Note:

EW is not about continuation.

Yes, this is my main pet peeve with EW. I prefer continuous cycles/waves, this is where other cycles and wave theories work better.

@TYGMedia

Thinking of EW inside EW will only bring complication.

Yes, agreed. Trying to analyze multiple wave degrees is pointless unless you’re an EW purist.

However the whole point of EW or any other cycles / wave theory is to forecast trend changes, but in order to do this one has to have a deep understanding of trends within trends.

Case in point, this chart was posted in another thread

On the surface it looks like trend is going down. But when you take a deeper look, the analysis is based on the “wrong” starting point (invalid base), which throws everything off.

Knowing where you are in a trend (your valid base) is the foundation for any sort of trend, cycles or wave analysis. Here is what I believe the analysis “should” look like:

@Dollar_McGavin

This adds another layer of complexity. I’ll add this more detailed chart to illustrate.

Believe it or not, the chart above is a detailed look into the anatomy of a higher timescale trend reversal.

In other words, it wasn’t a downtrend but an ongoing HTF trend reversal. Here’s an updated chart taken a few minutes ago (18 days later):

It started a new W1 or what I call a daily cycle. There’s still a ways to go but it’s on track to hit at least 200 (70% target) over the next 10 weeks, but I believe it can go much higher.

As you already know @TYGMedia, forecasting trend reversals isn’t magic but IMO, it’s impossible to do without understanding trends within trends, as I wrote earlier:

@Dollar_McGavin

So with all of the above in mind:

1. if a trend / cycle / wave is fractal in nature then how do you objectively differentiate a trend / cycle / wave of one scale from another?
2. if trends/waves/cycles are fractal and are also a series of highs and lows, how can you objectively identify which highs and which lows belong to which trend/wave/cycle?

[TYGMedia]

@Dollar_McGavin

Your reply sparked off a thousand different thoughts in my head.

Hi @Dollar_McGavin,

Thanks for your appreciation.

Actually my TA skill won’t be that complex. My approach is very close to PA. Since PA is so powerful, it can explain many other strategy. To be honest, I haven’t found any strategy better than PA. The foundation of PA is actually econometric inherited from Wave Theory. However, most trader learn PA only to its surface, hardly know the core beneath PA. Even Babypips article doesn’t reveal it even a bit. The PA’s core is all about math. It’s not HH, HL, LL, LH.

About EW, it’s momentum what we are looking for. Most people think of EW as pattern. This is very very highly wrong.
Example, when you are surfing. When the ocean is calm, we sit on our surfboard, waiting. We monitor the ocean to find a sign of good surfing wave. When we have the target, we get close to ride the wave.

The same thing to EW. We need to wait market to calm down. That means we look for a “base”. While we are waiting, we browse internet, look for fundamental for incoming events. When we already know the event, what we do, preparing ourselves for its arrival.

EW can happens during M1 chart, it’s not necessarily becomes a part of EW on HTF. EW description on internet, mostly wrong. I don’t know who started it But it should be a blessing for EW’s Gurus. I think I have to make up more to have the benefit to be new EW Mentors. Adding some zodiak will be cool so I’ll be seen as new EW Expert to scam more people

@Dollar_McGavin

forecasting trend reversals isn’t magic but IMO, it’s impossible to do without understanding trends within trends

PA has a very good principle to forecast reversal. We don’t need to draw anything, by looking at different TF, we can forcast the magnitude of a reversing pattern. You can learn the original PA about Conversion Zone. Nowadays, there are many explanation about Conversion Zone, however, the more explanations are created, more distance the idea from the original. It has misled so many people.

What I see, PA has been a perfect tool for trading. But since many trading “Guru” added their ingredients, most explanation about PA are wrong.

Have a good trade to all BP

[Dollar_McGavin]

First of all, big thank you @TYGMedia for engaging on this topic, fantastic insight into your lens of viewing the markets!

@TYGMedia

Actually my TA skill won’t be that complex. My approach is very close to PA. Since PA is so powerful, it can explain many other strategy. To be honest, I haven’t found any strategy better than PA. The foundation of PA is actually econometric inherited from Wave Theory. However, most trader learn PA only to its surface, hardly know the core beneath PA. Even Babypips article doesn’t reveal it even a bit. The PA’s core is all about math. It’s not HH, HL, LL, LH.

This was interesting!

If I understood you correctly, we’re talking old school OG price action (2nd generation TA after Wyckoff, Livermore). There is very little formally written about it, more like “tribal knowledge” passed down by floor traders and hardcore independent tape readers.

@TYGMedia

About EW, it’s momentum what we are looking for. Most people think of EW as pattern. This is very very highly wrong.

Ah yes, I believe you’re referring to energy flow analysis–things like momentum, energy, force, energy potential and efficiency–of price movements.

If I understood correctly, you’re applying explicit math formulas to what the early floor traders did by intuition, they called it “reading the tape”.

Awesome stuff!

@TYGMedia

PA has a very good principle to forecast reversal. We don’t need to draw anything, by looking at different TF, we can forcast the magnitude of a reversing pattern. You can learn the original PA about Conversion Zone. Nowadays, there are many explanation about Conversion Zone, however, the more explanations are created, more distance the idea from the original. It has misled so many people.

Yeah, I never draw this much on a chart, it was more to explain the concept to others.

Essentially we view the charts in a similar way–where patience is a huge edge–but approach it from different perspectives.

Old floor trader wisdom:

“Inside a Conversion Zone, survival belongs to the patient. Execution waits until the battle clearly tips to one side.

"Most lose not because they can’t read the tape, but because they can’t sit through the boredom and wait for the kill shot. Conversion Zones are where the market hides the prize. The patient inherit it. The impulsive pay for it.”

[TYGMedia]

Hi @Dollar_McGavin,

It’s my pleasure to have you as discussion partner.

@Dollar_McGavin

If I understood you correctly, we’re talking old school OG price action (2nd generation TA after Wyckoff, Livermore). There is very little formally written about it, more like “tribal knowledge” passed down by floor traders and hardcore independent tape readers.

I’m not talking to enhanced PA by many gurus, especially after it gets polluted by some “smart” … It’s around the era of OG PA. When I learned econometric for PA, it had part of them to count wave length. To made it simple, we needed to substitude 5 pips or any market length to 1 wave unit. The result was similar to tape reading scenario. Surprisingly, it’s still working excellently until now.

@Dollar_McGavin

Ah yes, I believe you’re referring to energy flow analysis–things like momentum, energy, force, energy potential and efficiency–of price movements.

Yup correct, example, when price is stabilized at 100, either by fundamental or institution, price is wanted to be moved to 200. there will be accumulation period to shake the price at 100. We will see Wave 1 and 2.
Next phase, price is started to be manipulated to 200, we will have wave 3 up to 5. On this phase, the initial target will usually surpassed. The initial target 200, we can have 250.
In the end, market need to release the heat, during distribution and correction happens to have a smooth landing to proper target, which is 200, a correction happens. We have EW a-b-c patterns.
From here, we actually can see, how important is to identify proper base. It’s really a basic / survival instict in the market. When we use PA, we can see very clearly every movement and who will be the initiator.

In the end, for PA trader, conversion zone is all that matter. Once we know this, we can do every acrobatic style in the market. Event when we do arbitrage, it’s also started by looking at conversion. HFT is also differentiate by doing it before or after the conversion zone.

Probably I have been too addicted with PA, so my mind is poisoned to PA principle
Probably I don’t learn other techniques properly so, I don’t find others technique will be helpful.

Examples of how PA explain EW in detail

Example how to forcast EW with math

[Dollar_McGavin]

@TYGMedia

When we use PA, we can see very clearly every movement and who will be the initiator.

From my experience, this is the key to profitable trading—being able to relate chart analysis to what is happening in the market.

@TYGMedia

Probably I have been too addicted with PA, so my mind is poisoned to PA principle
Probably I don’t learn other techniques properly so, I don’t find others technique will be helpful.

You don’t need any other technique!
When you can read the market, you can make any technique or strategy work, this is what I’ve experienced. I tried every discipline of TA and failed with all of them before I learned to read the market.

@TYGMedia

Examples of how PA explain EW in detail

…

Example how to forcast EW with math

This is interesting, there are some similarities to Goodman Wave Theory.

[MattyMoney]

Great info in this thread.

@TYGMedia

Examples of how PA explain EW in detail

I like to use the fib retracement tool (modified), which gives me the same range. The green area being the optimal entry area:

[VasilTodorov]

oh my god this is very useful information i wish more people like you exist

[TYGMedia]

Hi @MattyMoney ,

Thanks for your appreciation.

@MattyMoney

I like to use the fib retracement tool (modified), which gives me the same range. The green area being the optimal entry area:

I hardly use Fibonacci retracement to currency pair, as they are not consistent enough. Fibonacci Expansion is more useful in my case.
The generic idea for Fibonacci is trading correction, so I prefers to look into a retracement between 50-75% and look for SnR. This idea work better by adding PA.

I have talked a lot here. Hopefully more good trader will be risen. Traders are important as economic equalizer.

[TYGMedia]

Hi @VasilTodorov, thanks for you appreciation.

As always, I will talk base on data and fact. Hopefully today we all can earn something from market. All instrument are showing pretty good patterns.

[Margaretwantstotrade]

@TYGMedia

As always, I will talk base on data and fact.

Thanks a lot for that. I wish the moderators here were half wise as you are!

[TYGMedia]

@Margaretwantstotrade

Thanks a lot for that. I wish the moderators here were half wise as you are!

Hi @Margaretwantstotrade,

Thanks for your appreciation. I believe the moderators have been trying their best. Unfortunately, they can’t satisfy everyone.

[Jackie.Wilson]

@Margaretwantstotrade

I wish the moderators here were half wise as you are!

You may not have noticed, Margaret, but it’s the changes in moderation here, and the fact that they’ve been highlighted in a couple of other context-relevant places, that has re-activated Babypips and brought in so many new members recently (of whom I’m one) and the return of so many others who had previously left over the spam, rudeness, promotional posts and bots that are now - most thankfully! - dealt with so efficiently and effectively!

The moderators are clearly doing a GREAT job now! Hence the hugely increased activity-levels around here.