Forex And The Anatomy Of An Elliot Wave
By Adrian Pablo, Thu Dec 8th
As you enter the world ofForex you will immediately feel the basic need all Forextraders have: A method or technique to forecast the marketbehavior with the highest possible accuracy.
There are a number of methods and techniques that traders haveresearched through the years with this goal in mind. Thesetechniques are based on different indicators and approaches totrading, and each one has had its own successes and positiveoutcomes when applied to specific market conditions, but thereis no doubt that among the most successful of these techniquesyou will find Elliot Waves as one of the best concepts andmethods you can learn.
Ralph Nelson Elliot observed that the markets have strong trendsthat seem to follow a repetitive pattern in all the differenttime frames you can trade and after analyzing a great number ofcharts he discovered in the late 1920's that the markets move ina repetitive manner far away from a totally chaotic behavior.
He divided market movements into trends, corrections
andsideways movements. With these distinctions being made he thenassigned a wave terminology to these periodic movements; hecalled the trend movement an Impulsive Wave and a correction aCorrective Wave.
In order to have the formation of an impulsive wave we need fiveconstituent waves "inside" this wave. This will be three wavesin the direction of the trend and two corrections against thetrend.
But considering the fractal nature of the waves found by Elliot,then each of the smaller impulsive waves will have itself otherfive waves "inside".
In the case of the corrective waves they will be formed by otherthree smaller waves. Two in the direction of the correction andone in the direction of the trend.
Considering the repetitive nature of Elliot Waves you can make apretty accurate forecast of what the markets will do next, withthe huge advantage this represents in your daily encounters withthe currency markets.
About the author:Adrian Pablo is a freelance writer with articles published in anumber of places. Get a free report on Fibonacci Trading andlearn more about the world of trading , visit:
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