Crypto Academy Homework Task Season-2 Week-6 Post For @fendit

ckole (68)in SteemitCryptoAcademy • 3 years ago (edited)

Thanks to @fendit for giving us a fantastic lecture on Elliott's theory. The explanation was lit, and I enjoyed reading every bit of the presentation. I will be answering the questions asked by our able professor one after the other. Please stay tuned as I explain what I understand by Elliott's theory and its application

Elliott theory expalined

In the world of cryptocurrency and forex, there are several scopes, tools, and ways of reading and forecasting the market. The Elliott theory is one paramount way we can use to manage our assets. An American aqccountant and a author named Ralph Nelson Elliott came about the Elliott theory from observing the Dow theory. He studied and realized that the stock market can be a kind of repetition of which he was able to arrive at a conclusion.

He said" Trading is the act of using technical analysis to decide the trend of the market. He went further to explain the concept and analyzed the market in a greater depth looking into the specific characteristics of the wave pattern and also making several predictions with respect to the bullish and bearish movement of the market

Now, the first question.

What's the application of this theory?

The application of the Elliott theory is mainly to study the price movement of assets using corrective and impulse waves as explained by professor @fendit. All still boils down to the bullish and bearish movement of the market. It deals with how the market moves up and down. The theory makes us know the right time to enter the market and when to quit. Knowing this principle helps to stay gallant in the market. The Elliot theory is applied to identify some impulses of waves, creating patterns, either impulsive or corrective.

Second question

What are impulse and corrective waves? How can you easily spot the different waves?

The impulse and corrective waves are both technical analyses used to decide the market flow. From what I learned from the tutorial by @fendit and some personal findings, I will explain what I understand on how they can be spotted.

The impulse wave explains 5 different categories.

The first deals with the time traders buy assets when the price is low. The moment they discover that the price is about to go bullish, they get into the market and buy some asset. When there's a sign of deep, they sell and take their profit, however, the price of the asset wouldn't go low as when they purchase in the first place. The third part is when traders start buying the asset and there's a bullish movement. This uptrend creates a very long reaction, where the candle sticks produced would be green (going up). The step two as explained in the Elliott's theory looks similar. Here, the price comes down a little and that's called a reversal. When traders see that there's a reversal, they sell an take their profit. Thev fifth part is when some traders buy an asset that is far beyond the the price they are supposed to enter the market. For example, a coin might go up and keep the tempo. Some traders might believe the coin will keep going bullish, and at that high point, they key into the market and buy at high price. By the time the coin drops, they go into loss. Of course, this I not good for day traders. It might be okay for long term traders. LOL

Wave 5: Very small rush in the price caused by bullish traders that will, unfortunately, be buying an overpriced coin.

The corrective wave

As explained above, The corrective wave has 5 secretes, but only 3 is applicable in the case of corrective wave
We have the Zigzag, flat, and triangle. All these are the main parts that made up the corrective wave. They are the 3 wave pattern that moves in an opposite direction to the impulse wave.

The Zigzag parttern

The zigzag pattern is much known as the main part of the correctional patten, though there are other like patterns. It has just three waves labeled A, B, and C. The Zig zag pattern has a kind of consistent part. Every other pattern is coiled from the zig zag structure. The only difference is that the flat and triangle patterns have their waves and a way of identifying them. The A nd C waves are said to be a 5 ways impulses of which the wave B is regarded to be the smaller zigzag wave.

Source. My design

The Flat parttern

The flat wave pattern is a little bit easier to spot. If well noticed, we would discover that the wave has the same length, which always exceed the previous impulse. The flat pattern can be useful in such a way that trades must be opened along with the trend and also the wave C is completed inside the flat pattern or it's lower border.

The Triangle parttern

The triangle pattern is always identified by observing the high and the low lines. It would be in a zigzag way, but the triangular pattern can be identified by tracing the lines and understanding the shape at which the market is moving. This pattern forms mostly in wave 4 or wave B in a zigzag manner. This pattern is useful in such a way that after the price of an asset bounces off the lower border on the triangular shape, it's a sign to buy (Meaning the market is going bullish.). Furthermore, when it goes off its upper border, It's a sign to sell. So, in a nutshell, the triangular pattern is helpful in predicting the ups and downs of an asset.

What are your thought on this theory? Why?

Well, my thoughts on this theory is based on the fact that Elliott did very intelligent research by extracting advanced concept from the bow theory. He further expands the theory and came up with something spectacular. The impulse and corrective patterns are good ways to analyze the market and know when and when not to enter the market.

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 required and make sure you name which cryptocurrency you're analyzing

Here, I selected the doge coin. From the image below, the green lines shows the zigzag movement pattern.

Screenshot (118)vbeebbbe.png

The flat and triangular pattern was explained initially above.

Conclusion
.
The Elliott wave theory is a fantastic instrument created to help traders get the best out of their investment in the crypto and forex market. Though the concept is on ground, the result of its uses depends on the subjective interpretation of the trader or user. The more you understand how to use the tools, the better. Elliott did a great job by coming up with this theory. It's helpful, however, knowing and understanding it better is the key to success.

Thanks to @fendit for this lovely homework.

Thanks for reading.

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@steemcurator02
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@fendit

#fendit-s2week6 #cryptoacademy #nigeria

3 years ago in SteemitCryptoAcademy by ckole (68)

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fendit (72) 3 years ago

Thank you for being part of my lecture and completing the task!

My comments:
Your work was fine, but I believe you could have developed a lot more your answers. As well as that, the pattern's almost impossible to see in the chart, so I'm not that sure if you completelly got the concepts as I can barely see the mark you did on the waves.

Overall score:
4/10