I’m a person who wants to get into trading Forex and I had just started learning on BabyPips :D.
Just finished with the Elliott Waves chapter and I have a question which I could not figure out by reading materials beyond this site…
I will first state what I understood about Elliott Wave theory.
Say one successfully identifies the impulse pattern(1-2-3-4-5) and the correction pattern(A-B-C) in let’s say an uptrend.
Initially I assumed that this theory states that once the price has moved according to this pattern(1-5 impulse waves then A-C corrective pattern) the price is supposed to reverse and go in the opposite direction(hence the name ‘corrective’ pattern). But apparently I was wrong as the price can very well continue in another 1-5 pattern in the same direction and not reverse.
My question is the following:
Once we identify the 1-5 and the A-C corrective pattern on a price chart what are some strong indicators that the price will reverse or continue? How do we decide whether to keep riding the trend or go against it?
Please give some hypothetical examples if possible so I can understand this better. Thank you!