The purpose of writing this article is to make you understand my post, with fewer trolls and less know-it-alls, to correct the old version of the wave theory, and to talk about the wave theory applicable to the current financial market. The wave theory is too complicated, so I can only talk about some basic points or the basics. It’s good for you to understand it, and then follow my thoughts and watch the market, and you will understand it little by little.
The full name of the wave theory is the Elliott Wave Theory, a theory from more than a hundred years ago. Some things (that is, the wave theories you can access on the market are not applicable to the modern financial market, so what I said are all dry goods)
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There are two types of wave theory, one is called rising eight waves, and the other is called falling eight waves. You can just look at the picture I drew. These two wave types can be converted to each other and can continue forever. After the eight-wave cycle is completed, a new eight-wave cycle will start again. However, after the rising eight waves are completed, a new rising eight waves should be followed, and after the falling eight waves are completed, a new falling eight waves should be followed. Unless there is a three-to-three or five-to-five long-short pattern conversion, there will be a situation where the rise turns to fall or the fall turns to rise.
Basic theory (revised):
Waves 1, 3, and 5 are called propulsion waves, which are the waves that promote the development of the market. Waves 2, 4, and 5 are called correction waves, which are the waves that correct the market.
Among them, the third wave cannot be the shortest wave, the pullback of the fourth wave can fall below the peak of the first wave, the fifth wave may fail (not the highest point wave), and the pullback of the second wave must not fall below the first wave.
Alternation rule: If the second wave retracement is shallow, the fourth wave retracement will be deep, and if the fourth wave retracement is deep, the second wave retracement will be shallow. The first wave will extend to the third and fifth waves with a high probability. Note: The first, third and fifth waves may extend at the same time, but it is a low probability event.
As long as it is an extension wave, it has a five-wave structure, and as long as it is a correction wave, it has a three-wave structure (abc wave structure).
Corrective waves may follow a pattern, mostly referring to price patterns such as wedges or flags, etc.
What is an extension wave? See the picture
The impulsive waves are all five-wave structures, and the corrective waves are all three-wave structures. Just remember this point, and you don't need to think too much about the internal details. I just hope that you will know what the extension wave is when you see me mention it later. The C wave is often the wave with the largest decline.
Recognition is the most difficult part of the wave theory, and identification of extended waves is the most difficult. If someone comes out and says that my wave pattern identification is incorrect, there is no need to question it, because he must be wrong.
3. Three to three turns to empty, see the picture
This is a pattern of bulls turning into bears. The second wave falling below the first wave is the sign of this pattern. If it falls below the first wave, then the fifth wave of the previous eight rising waves will be recognized as the starting wave of the eight falling waves. Then the subsequent eight-wave cycle will no longer be an eight-wave rising cycle but will turn into an eight-wave falling cycle.
I won’t talk about the five-on-five multi-turn empty position because it is a bit complicated and cannot be explained clearly here.
4.Where is the best buying and selling point?
Buy after the second wave of correction is completed and take advantage of the third wave of gains.
Sell when the fifth wave high point appears to take advantage of the decline of waves abc.
Of course, if you don't agree with me, just treat me as a fart. This is not a teaching article, but just the basics of waves so that you can understand or further understand my thinking. If someone who knows something comes out and says that I am wrong, then you must think that I am wrong.
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