Crypto Academy Week 14 Homework - Elliott Wave Theory.
Today is the last day for this week's class and I hope I am able to finish this assignment before 11:59pm UTC. The time is 7:06PM UTC and I will be starting the assignment by @fendit on the course "Elliott Wave Theory".
What's the application of this theory?
Due to the unstable and chaotic manner waves moves in a trading pattern, Nelson Ralph Elliott in early 1930 came to a conclusion on how to help traders study their trading waves and help ensure how to monetize trade and cause less loss, he came with the introduction of the Elliott wave theory.
Elliott also imposed that psychology in the financial price trend is not on a straight equilibrium but goes in an upward and downward move otherwise showing a way that profit and loss are being implemented when trading. By doing this it became very easy for new traders to understand how the trading pattern works. Elliott wave helps us to identify the current market trend, where, and how to react to the market in the future.
What are impulse and corrective waves? How can you easily spot the different waves?
The Elliott wave consists of 8 waves in total with 5 patterns being the impulse wave and 3 being the corrective wave.
Impulse Wave
The impulse wave is numbered 1, 2, 3, 4, and 5. The odd numbers are the strong impulse while the even numbers are retracing waves. Impulse wave can happen in a bullish or bearish market and for a wave to be drawn, there needs to be a base/root. The base for the impulse wave is where the uptrend starts in a bullish market. and the peak of the wave is Wave 1. There is a reversal from Wave 1 to form wave 2 (wave 2 do not go downward to 100% of wave 1, if this happens, then the wave is wrong). Wave 3 is the longest wave of all as it is an impulse wave to another peak. Wave 4 is a reversal from the high of wave three but does not get to wave 2. Wave five is the final wave impulse before the corrective wave begins.
The waves represent rises and fall in the price of the market that occur due to the behavior of investors. The Elliot wave does not study the coin behavior but rather, that of humans which can be predictable as it evolves around fear, greed, and positivity.
Corrective waves
These waves move in the opposite direction to the impulse wave. Their movement is always against the trend of one greater degree, these waves are not well understood until they are fully completed. The wave is named A, B, and C and its roots start from the impulse wave 5. The waves can be of different types which are;
- Zig-zag
- Flat
- Triangle
Wave A is corrective going against the trend followed by Wave B which goes with the trade but not beyond the root of Wave A. Wave C is also a corrective wave going further against the trend.
What are your thought on this theory? Why?
The Elliott wave theory might not be a rule yet, but it enables traders to make better price predictions and improve trade decisions. Knowing the direction a wave will run enables traders to trade in the current direction favorably compared to when the direction is not known. Also, knowing that there will be a reversal at 2 and 4 will enable traders to take profit as well as short trade the market The same goes with the corrective wave. Elliot wave is no doubt good for traders to know when to trade as well as take profit when trading.
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.
Coin Name = BTC/USDT
Platform = Tradingview
Time Interval = 1 Day
To this, I checked a chart from December 2020 to May 2021. I had to find a point to begin its cycle and the point began from December.
After a corroboration, I placed a root to start the wave cycle. The wave starts from 0 and the peak of the wave is Wave 1. After which wave 2 starts as a reversal and then wave 3 starts a stronger and longer impulse, then wave 4 which is another reversal before reaching for the last wave (wave 5).
The corrective wave A, B, and C starts after the peak wave 5 and ends at a corroboration.
Conclusion
Elliott wave theory helps traders in re-organization of market plans into a well-explained trading theory. It gives traders advance strategies in widening their horizons when making a trade. This theory helps increases trader confidence and gives the trader the accurate results actually expected. It helps minimize the implications of the immediate trading in the market. Elliott wave is not 100% correct and should not be used as a tool for trading alone, other indicators as well as check the volume of the market.
Thank you for being part of my lecture and completing the task!
My comments:
Explanations were alright, although they could have been a bit more ellaborate.
When it ocmes to the pattern, it has not been correctly identified, as wave 3 wasn't properly shown and it was the most important thing of the tasks!
Overall score:
4/10
Why have all other people's posts been reviewed, while my posts haven't been reviewed for two days
@fendit
https://steemit.com/hive-108451/@nandacoa/steemit-crypto-academy-musim-2-minggu-6-or-or-teori-elliot-untuk-profesor-fendit