Due to the amount of hot air being bantered around elsewhere I thought I'd do a specific Elliott Wave strategy that people can clearly understand and replicate. I will show the specific rules here and you can apply them when you see similar patterns. I will update charts and examples on an ongoing basis but will do so only after the setup is triggered so my subscribers are not disadvantaged.
I have no use for time.
I have no use for cycles.
I have no use for intra day time frames.
If you do. Great. Go use them elsewhere.
My point is that over time we'll make very good profits with ease and without stress. Anyone can do this in a bull or bear market, on any time frame, in any market and without expensive software or a degree in rocket science. Let me also stress that EW is not making the money.
As usual I'll be happy to answer questions.
Let's lay out the rules, the pattern and the setup using recent price action in CBA. This pattern example is an A-B-C but I will also trade triangles, flags and rectangles.
You can see here that CBA advances strongly off the January low. We know its a strong move because its quite a clean swing higher that contains a gap. Subscribers will know why that gap is important but for our example it simply shows good buying pressure. We do not know, and need not know, if the high set on Feb 13 was a wave-1 or -A. All we need to know is that its the end of an impulse and after every impulse a 3-wave counter trend move will occur.
Next note the 3-wave counter down to the Mar 9 lows. This is what you need to watch out for. This is the setup. It should retrace now more than 70% of the prior advance and it should contain 3 clear waves.
Now we determine an entry level or trigger point. We do this by measuring from the Feb 13 high down to each successive low point. In this example you would have started on Mar 3, then Mar 4, 5, 6 and 9. So you take the high point to the absolute low point. We do not know how far down this swing will be so we keep adjusting each day until the market swings higher again.
The trigger point is a 25% swing up off the lowest low which occurred on Mar 10 entering us long at $27.67. At no time in the preceding 5 bars did the market swing off an EOD close of 25%. An entry would have been setup on Mar 4th had prices swung higher that day - but they didn't, indeed they opened lower. This swing entry technique is outlined in my book, pages 99 - 118.
Therefore we are long at $27.67. We place our protective stop 1c below the lowest point which is $26.43. Our risk is therefore $1.24
To set our target we measure the length of wave-1 or -A and add that distance to the recent low of $26.43. Our target is therefore $33.80 which if met will offer a risk/reward of 4.94. We trail a stop behind or take profit at the target.
Will the target be met? Who knows. In theory it should but with a risk/reward of almost 5 I will take these trades any day of the week even if they only succeed 30% of the time.
This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.