If you have gathered some important concepts on science, the Fractal theory is sure to excite you. Scientists claim that the universe is itself a Fractal in it that every portion of it resembles the whole. The world economy as a whole also works on quite the same principle. That explains the repetitions if price movements after specific time intervals. Elliott wave Forex theory pretty such bases these ideas into oscillation theories and presents set of 5 part wave harmony.
This part oscillation of waves is Fractals to the entire movements and occurs at regular intervals. They provide valuable information on trends of the system and also prompt traders on buying/selling.
Price movements do not lie on rose beds:
The Elliot wave theory explains that markets fluctuate with no definite patterns and often there are alternate layers of retracement and reversals. However, this theory throws light on real time price movements which oscillate to and fro.
With experience, traders learn how to make proper use of this data and efficiently find entry/exit points. Plus traders can literally squeeze in after proper management of direction and lengths of the waves.
Elliott waves Forex trading and its effectiveness:
Instead of finding larger wave fluctuations, Elliot concentrated mainly on smaller wave movements.
• In case of abrupt market conditions, prices suffer turbulence and follow a pattern. If you closely look at this pattern, there are five parts. From an economic point of view, this disrupts the regular wave patterns and implies that something is going to happen.
• Prices may choose to hit extremes or may hint a reversal beyond this point. The variability of the movements, however, depends on the intensity of impulses that causes this. Irrespective of the currency oars one is dealing with, it definitely follows a pattern which is although not equal, is equivalent and similar.
On waves and implications of their inconsistent movements:
Elliott Wave Forex theories lay stress on the chief trends and work in 5 parts. This theory is helpful in finding the estimated direction of the trend. Smaller the part of price movement you concentrate on, better the chances of correct estimations. Additionally, it also determines the presence of countertrends which eventually hints market normalcy.
Oscillating wave theory puts stress on 5 different waves in a particular direction whereby even numbered ones are falling, and odd numbered ones rise up. This zigzag pattern might not follow a strict rule, but traders may decipher a general trend from this. While the middle wave is often the shortest, the even numbered waves should not fall beyond the beginning of odd numbered waves.
Oscillation and trend detection:
There are different forms of indicator that aid traders in giving stronger signals. The 34 period EMA data takes into account the price movements in the past 34 days while the middle wave provides the most appropriate signal. It has two parts, a positive and negative. Divergence of each from locus indicates the presence of stronger or weaker trends.
Experts are of the view that Elliott Wave Forex theory is comparatively difficult to understand given its intricate features. It aids traders in identifying retracement levels and help denote oscillations on price charts.
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