Basic Tenets:
Elliott waves are famous for finding crowd behavior trends and reverses in recognizable patterns. Elliott’s wave principle is inspired and made from the Dow theory, which is the foundation of the technical analysis.
Elliott’s wave principle consists of eight waves.
In this eight wave, price forms two types of wave structure,
1. Motive structure:
– Five Wave Pattern.
– Moves with the primary/main trend.
– Labeled in Numerical method (1,2,3,4,5).
2. Corrective structure
– Three Wave Pattern.
– Moves against the primary/main trend.
– Denoted in alphabetical method (A, B, C).
Now, let’s look at the 2-day chart of 3MINDIA.
Timeframe: 2 day
Price has accomplished the impulsive wave (3) and started forming corrective wave (4) by breaking sub-wave iv of wave 5 of wave (3).
Currently, the price is in corrective mode.
Sub-wave 5 of wave (3) has ceased, the terminating wave v of ending diagonal. Price has broken down the corrective wave iv at, 22590, which signals bearish sentiments. After breaking the main channel, the price started falling sharply.
Calculation of wave (4):
The common retracement of wave 4 is 38.2% of wave 3.
Wave 4 can never retrace more than 61.8% of wave 3.
Wave 4 occurred near sub-wave 4 of lower degree.
Timeframe chart: 4-hour
Price has broken down the sub-wave iv of the ending diagonal of wave 5.
After the pullback, if the price sustains below, 22590, it is likely to give a big move below the parallel channel.
Traders can initiate a short position for the following targets of 21010-20557.
Invalidation and entry are available for only premium subscribers.
Please log in to read the entire text. If you don’t have a login yet, please subscribe now to get access.
Would you like to get our share market updates instantly?
Click the link to join: Free Stock Tips
Do you want to get premium NSE calls?
Click the link to subscribe: Premium NSE Stock Tips
If you have any questions or concerns about the stock market, don’t hesitate to contact me:
- Email: [email protected]
- Phone: +91 903 386 2706
Have you any questions/feedback about this article? Please leave your queries in the comment box for answers.