Elliott Wave Zig-Zag to Extend?
In this update Rob explains how the Zig-Zag forming Wave 5 of the current Elliott Wave Impulse pattern looks like it wants to extend. However, so far we’ve failed to have a confirming follow through day… to either the upside or the downside … and hence we are seem stuck at the 381 Fibonacci which is proving very strong resistance indeed!
No doubt the trading environment that we face today is completely different than the one in the 1930 s when Elliott first developed his wave principle. Legitimate questions arise whether Elliott Wave Principle can be applied in today s new trading environment. After all, if it s considered to be common sense to expect today s cars to be different than the one in the 1930 s, why should we assume that a trading technique from 1930 can be applied to today s trading environment?
Hi Tedmond, Your question is not an unreasonable one and our answer is probably predictable. Given that we actively use Elliot Wave analysis on a day-to-day basis with positive results, there is no question in our minds that it is a valuable analysis technique in today’s markets – you can see our actual track record on this website! However, for someone who is new to the concept of Elliott Wave there are definitely a few points to be aware of… a) Elliott Wave is model for market price action, not a crystal ball. In other words, the model anticipates future price action based upon recent historical price action (just like any form of technical analysis), but it doesn’t mean that is always exactly what happens. b) Elliott Wave is most valuable when combined with other indicators. Elliott Wave has its own weaknesses which can be off-set by filtering with different methods of analysis. c) Learning to apply Elliott Wave analysis takes a considerable amount of time. Unlike many technical analysis indicators where you just click a button on a piece of software and two lines crossing is a buy or sell signal, Elliott Wave is nuanced and requires a good deal of understanding to get value from. In summary, I can say quite confidently if you are a technical trader, it’s worth putting some time in to understand Elliott Wave, because even if it doesn’t become one of your primary analysis methods, your conceptual understanding of technical analysis will grow dramatically in the process… and all of these concepts are still very valid and valuable in today’s markets. Hope that helps!