STEEMIT CRYPTO ACADEMY - SEASON 2 , WEEK 6- ELLIOTT WAVE THEORY BY @fendit

Hello Friends,

special thanks to @fendit for the simple and straight-forward lecture. thumbs up.
below is the answer to the homework task.

A)Share your understanding on this lecture by answering the following questions:

1.What's the application of this theory?
The Elliot Wave Theory (EWT) is a technical analysis theory that can be used in cryptocurrency or foreign exchange trading. The Elliot wave principle is linked to Isaac Newton's third law of motion, which states that there is an equal and opposite reaction to every action. Every trader in the financial market must understand and recognize that commodity prices are not stable, and that they typically move up and then gradually fall back to where they started.
This principle can be applied to financial instruments such as cryptocurrency trading. It can be used to determine when the price of a commodity will rise or fall on a technical level. A trader can use it to determine when to enter a trade and when to take profit and exit.
A trader who is unaware of this theory would appear to be walking into a dark room late at night with sharp objects on the floor that could injure his foot. Using the EWT strategy can help a trader gain a better understanding of market trends and predict future trends. According to the EWT principle, the market follows a predictable pattern, so all a trader needs to do is carefully analyze the market trend before making any trading decisions.

2.What are impulse and corrective waves? How can you easily spot the different waves?
Impulses wave: This is one of the two wave patterns described by Ralph Nelson Elliot in his theory. Wave patterns are usually unique in nature, and they're used to forecast a market's expected outcome after careful analysis. The impulse wave pattern is categorized or tagged 1-2-3-4-5. The impulse wave is used to detect both upward and downward market trends.
Corrective wave: This refers to waves that move in the opposite direction of the trend. They usually appear after the five impulses and are difficult to detect in nature..
Corrective waves are typically divided into three (3) major patterns depending on how they form. The groups classified into are :

• Zig-zag (5-3-5)
• Flat (3-3-5)
• Triangle (3-3-3-3-3)
  How can you easily spot the different waves?
  The difference between these two waves is that the impulse wave moves in the same direction as the market trend, whereas the corrective wave moves in the opposite direction.
  
  3.What is your thought on this theory? Why?
  The Elliot wave theory is a trading strategy that a beginner in the market should use if they want to make money without risking their account. When you examine the theory critically, you will notice that it contains rules, guidelines, and a designed pattern to assist a trader in navigating the market and trading successfully.
  This theory can assist a trader (especially a novice) in determining when to enter the market, place a trade, set a stop loss, and take profit. A trader can use the theory to predict what has happened in the market in the past and what will happen in the future.
  This is a tried-and-true theory that has successfully provided traders with all the information they need to track the market sentimentally, knowing that market movements are caused by traders' psychology, which can be positive or negative over time.
  

B)Choose a coin chart in which you were able to spot all impulse and correct waves and explain in detail what you see. Screenshots are and make sure you name which cryptocurrency you are analyzing.

http://deriv.com
The ETHBTC coin chart above depicts a one-week trading period. The bullish trend is represented by green candles, while the bearish trend is represented by red candles.
The corrective wave patterns can be seen in the areas marked A, B, and C. In this region, the market began on a bullish trend at point A, then immediately reversed to a bearish trend until point B, at which point the market went bullish with only one candle, before reversing to a bearish trend at point C. Because of its movement in the opposite direction, we can call this a corrective wave.
The impulse wave pattern can be seen in the areas marked 1, 2, and 3. The market was in a bullish trend in this region, and it was very specific. The bullish trend began at point 1, and then transitioned to a bearish trend between points 1 and 2. After that, there was a long bullish trend from points 2 to 3. And this is the trend's longest wave. As a result, this region can be identified as the impulse wave region.

CONCLUSION

Elliot wave theory just like every other theories has its merits and demerits. However to make profit, a trader has to master this theory effectively in order to make the best use of it. As a crypto academy student, I would recommend the trading with the Elliot wave theory because there will always be reversal after completing its five circles. So with this knowledge a trader can always predict the next move of the market in order to maximize profit.