Educational post for FOREXCOM:AUDUSD by Aggressivetrading

The Elliott Wave Theory offers various ways to enter the market. The common level of retracement that the market offers is the 61.8 fibonacci level, so the diagram above shows the 76,8 /78,6 fibonacci level but not always do we get to see the market retrace this much. Nomally the market will retrace this much if wave (1)/(A) was very impulsive.

Market on corrective phases usually respects the 4 fibonacci golden zones which is 0.38 / 0.50 / 0.618 / 76.8, most wave traders like 50 – 76.8 as it offers high R/R( risk- reward ratios). Alot of times it is followed by a 3rd so the its one of the waves that every trader wants to be in.

The market has three phases ( motive – correction – motive ) ,we have two types of motive waves ( impulse/diagonal ) . Motive waves will always be followed by a correction move. Note* wave 2 is never a Triangle pattern it can be any other corrective pattern ( Flats / zig-zag / double correction / triple correction ).

How the wave principle works is very fascinating it have rules which guide us to be on the right track of the market. So the are several rules to keep in mind ( – wave 2 is never 100% of wave 1 / – wave 4 and 1 never overlaps / – wave 3 is never the shortest wave compared to wave 1 , 3 ,5 / – motive waves are nomally labelled with numbers ).

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