Elliott Wave and Contrary Opinion

One area of market analysis that has come to be relied upon as a useful adjunct to technical analysis is the use of sentiment indicators. In using such indicators the analyst attempts to obtain a grasp of the predominant psychology of the market and use this to formulate a trading approach based on contrary opinion. The premise for this branch of technical analysis (though it is more psychological than technical) is that at any given time the majority of traders and investors are on the wrong...

Elliott Wave and Volume Analysis

We come now to one of the most overlooked measures in technical analysis trading volume. In recent years, market technicians including Elliott Wave analysts have largely ignored this crucial market gauge in their examination of the market, instead preferring to focus solely on price. Indeed, even Elliott himself made scant reference to volume in his writings. This is a mistake, and one that has been largely responsible for the perceived failure of the Elliott Wave Theory. For without taking...

The Averages Must Confirm Each Other

Our fourth rule of the Dow Theory is perhaps the most important one. For without confirmation of the averages. meaning the Dow Jones Industrial index anil the Dow Jones Transportation index , a market trend cannot be considered 100 valid. Expounding on this point, Hamilton wrote Dow always Ignored a movement of one average which was not confirmed by the other, and experience since bis death has shown the wisdom of thai method of checking the reading of the averages, fits theory was that a...

Complete Elliott Wave Cycle

As you can sec, the three wave correctioir is labeled A-B-C, which is standard Elliott Wave taxonomy. So then, die primary assumption of die tllioil Wave Theory is that each movement, or wave, of a pricc trend consists of five components waves one through five. These five waves arc followed by three corrective waves. The term wave itself has its origin from Dow Theory, as Charles Dow first made the analogy of stock market move-menu as compared to the waves of the ocean. In Ills book, Elliott...