Thursday, October 25, 2012

How Moving average Helps to wave counting of elliott wave

look 1hr chart.
EW analysis of USD/CHF 1 hr chart



I have used 6 MA
12
21
34
55
87
100

MACD indicator

MA 55 acts as support for extreme of wave 1 and start of wave 2
MA 100 acts as resistance for wave 4, so we can put sell entry with sl 15 pips above it.


When trend is ending

when MA 12 is touching 21, crossing and crossing 34, crossing 55, trend is ending
Also MACD helps to count 3rd , 5th wave

EW analysis , How Head and shoulder formed.1 hr chart




Note 

  • wave 1 is as break out of previous support and resistance, 
  • wave 1 extreme and wave 2 start can be assumed by MA 55

  • We need to wait till wave two ends for channeling and trend line drawn
  • As to draw trend line at least two hh or HL, LL, LH needed.

  • We also need to wait for at least two  hh or HL, LL, LH to see break out.

  • After breakout price retest the the break out point.

Rule of alteration of corrective wave:

If wave 2 retrace 61.8% wave 4 will retrace 38% of wave 3, which is equvallent of 61.8% of wave 1, if wave 2 retrace 38% of wave 1, wave 4 will retrace 61.8%.

If wave 2 form simple corrective wave , wave 4 will form complex corrective wave and vice versa.




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