The main application of the Elliot waves theory is finding suitable entry and exit positions in the market when trading. First of all, the main aspect us spotting the waves trend, which is always the most difficult i could say. The Elliot waves theory which explains the vividly the 5-3 pattern, the five being made up of (i, ii, iii, iv, v) and called the impulsive waves, and the 3 pattern consisting of (a, b, c) when applied after spotted with suitable stop losses can generate a lot of profits if pattern is followed.

^{Image Source} To say: It is always preferable to enter a position on a trade on the low of wave 4. If it is a bullish trend, then a buy signal should be place on the low of wave 4, while waiting for wave 5 to form. If it is a bearish trend, then a sell signal should be place on the high of wave 4, while waiting for wave 5 to form. The corrective wave is form immediately after the formation of wave 5, which is the best time to place a buy signal in a bearish trend, and a sell signal in a bullish trend.

Question 2

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

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In explanation of impulsive and corrective waves, i will use the graph above to simplify the understanding.

impulse waves
The first five wave pattern in the bullish graph above is an impulsive wave. It is often said the waves 1, 2 and 3 are Motive, and go along with the trend exponencially, and waves 4 and 2, are in bid to defined as corrective waves.

• Wave 1, indicates the initial move of the market,
• Wave 2, buyers, if a bullish trend, are closing trades and taking profits.
• Wave 3, which is the longest and strongest wave, indicates a good amount of buyers trying to push up the market again. Because it has cause the attention of the public.
• wave 4, traders are taking profits again, most espiecially due to emotions.
• wave, which is the last impulsive waves, when currencies become the most overpriced.

corrective waves
The later 3 waves in the bullish graph above is a corrective wave, made up of the a, b and c.
Elliott explained that, there are 21 corrective patterns.
Few are shown below

The Zigzag formation

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The Flat formation

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The Triangle formation

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Question 3

what are your thoughts on this theory and why

I can say personally, i so much love the Elliott waves theory, as i have always been keen enough finding such trends especially in the currency exchange market. The drawback is that, it actually forms very rarely, and requires a lot of patience to wait till the formation of wave 3, as at times, they turn to be fakeouts.

Section B

choose a Coinchart in which you were able to spot all impulse and correct waves and explain in detail what you see.

Lite coin Analysis Using Elliot wave theory

^{Screenshot analyses from metatrader4 platfrom}