They’re just looking for a “Third of a Third” or to get short after they think they see a complete 5-wave structure. Use Elliott Wave however you see fit and however it works for you - just like any of the hundreds of technical indicators out there.
The following chart shows the “ideal” trades one can take from a developing Elliott Wave structure:
First, let’s assume that we’re coming off a downtrend, or that the first green arrow up begins after a C wave down has completed. For quick reference, in order from left to right, Wave 1 is up; Wave 2 is down; Wave 3 is large up; Wave 4 is down; Wave 5 is up; Wave A is down; Wave B is up; Wave C is down - I didn’t label them in the chart to keep it from being cluttered.
Many proficient Elliotticians may disagree with me, but I believe it is either impossible or very, very difficult to ‘predict’ or label a first and second wave in real-time - especially for beginners. Elliott Wave becomes much easier once you see a large impulse - which is most likely Wave 3 - and then look backwards and see “Ok, I think I see Waves 1 and 2.” Once Wave 3 is in place, the rest of the ‘map’ is easier. There’s no guarantees, but it’s helpful for anticipating.
Wave 3’s power comes from shorts covering and longs getting aggressive - a ‘point of realization’ occurs… also known as a “Sweet Spot.” Aggressive traders can jump on board there as a trend changes from down to up. Though profitable, this is very difficult in real time.
The way I use Elliott Wave intraday and on shorter time frames is to recognize a large impulse and then wait to buy the first pullback into support. Maybe there will be divergences or price will pullback to a key Fibonacci ratio or a moving average. I don’t yet have a name for it but you’re trying to “Buy at the Bottom of Wave 4 and Trade Wave 5.”
This is a “Pro-Trend” trade and often subdivides into five fractal waves.
The top of the 5th wave often forms a momentum (or volume) or TICK (intraday) divergence into the highs, so it’s often low risk just because of that formation. Once you believe the “5th wave” has completed itself - it takes experience - then exit your long and flip short for an aggressive counter-trend trade.
If you miss the first opportunity, wait for Wave B to rise up and fail to make a new high and then enter short on that pullback. Often, the top of Wave B will form a Cradle Sell Trade and lead to a powerful Wave C trend reversal back down.
Here are the key trades to take as you perceive a possible 5-wave structure forming on any timeframe:
Buy as price crests above Wave 1 (this is during wave 3)
Buy as price comes into support after a large impulse Wave 3
Sell Short as price crests with divergences into the peak of Wave 5
Sell Short as price rises but fails to make a new high at the Peak of Counter-Wave B
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