Description

The Elliott theory is among the most known and applied in trading strategies. These are indicators that can be derived from the graph of a stock that predict with a certain accuracy the phases of development. This theory allows to calculate the trend signals (such as trend lines or support and resistance lines) extremely useful to understand the influence of the human factor on the financial markets.

The Elliott waves, in fact, allow to predict both in the macro and in the micro the pattern of variation of the quotations, both for macroscopic and microscopic analysis, is composed of cells that are constantly repeated. Each cell, called “wave”, is composed of 8 movements and characterized by an impulse, increasing or decreasing.

The pattern generally wants the five base waves, called impulse, to follow each other constantly, alternated at most by a correction, and at the end of these there is a trend reversal, anticipated by three other corrective waves.

Elliott waves are traceable both with long periods and with particularly short periods. The choice on which subdivision in periods to adopt falls exclusively on the type of operativity that you want to maintain: short periods are indicated for the trading online intra day, long periods for strategies to along term.