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Introduction to Elliott Wave Theory Ralph Nelson Elliott developed Elliott Wave Theory in the 1930s.1 Elliott believed that stock markets, which are generally considered more random and chaotic, were in fact traded in repeating patterns. In this article, we take a look at the history of Elliott's wave theory and its application to trading. WAVES Elliott has suggested that financial price trends system on the psychology of the dominant investor. He found that fluctuations in mass psychology always manifested in the same recurring or "vague" fractal patterns in financial markets. Elliott's theory is similar to Dow's theory in that they both recognize that stock prices move in waves. But because Elliott also recognized the "fractal" nature of markets, he was able to break them down and analyze them in much more detail. Fractals are mathematical structures that repeat themselves over and over on a smaller and smaller scale. Elliott found that stock index pri...

  What are Fibonacci Retracements? Fibonacci retracements identify key levels of support and resistance. Fibonacci levels are generally calculated after a market has made a big move up or down and appears to have stabilized at a certain price point. Traders plot the key Fibonacci retracement levels of 38.2%, 50%, and 61.8% by drawing horizontal lines on a chart at those price levels to identify areas that the market could retreat to before recovering. initial price movement. How does Fibonacci work in trading? Before examining the mechanics of Fibonacci trading and how it translates into a Fibonacci Forex trading strategy, it is important to first understand the Fibonacci sequence and the unique mathematical properties it offers. The Fibonacci sequence is a sequence of numbers in which after 0 and 1 each number is the sum of the two previous numbers. Lasts indefinitely. 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181, 6765 ... There are some inter...

What is Ichimoku Kinko Hyo? Ichimoku Kinko Hyo, or Ichimoku for short, is a technical indicator used to measure momentum as well as future support and resistance areas. The all-in-one technical indicator is made up of five lines named Tenkan-Sen, Kijun-Sen, Senkou Span A, Senkou Span B, and Chikou Span. Ichimoku Cloud Explained The Ichimoku cloud indicator consists of 5 rows calculated as follows: 1 Tenkan Sen Tenkan Sen = (9 high periods + 9 low periods) / 2 Tenkan Sen, also known as the conversion line, is usually red in color and is represented by the moving average of the midpoints of the last 9 periods. 2 Kijun Sen Kijun Sen = (26 high periods + 26 low periods) / 2 Kijun Sen, also known as the baseline, is generally white in color and is represented by the moving average of the midpoints of the last 26 periods. 3Senkou Span A. Senkou section A = (Tenkan Sen + Kijun Sen) / 2 Typically yellow in color, Senkou Span A is drawn as the midpoint of Tenkan Sen and Kijun Sen, with the line...

  Average Real Range The actual average range indicates the volatility of a currency pair. In the foreign exchange market, the volatility measure is very important because it is related to direct market movements. In any financial market, increasing volatility indicates a market reversal and decreasing volatility indicates the continuation of the market. The spread of a stock is the difference between its high and its low on a given day. Provides information on the volatility of a stock. Large ranges indicate high volatility and small ranges indicate low volatility. The range of options and commodities (high minus low) is measured in the same way as for stocks.       How Does this Indicator Work? A rising ATR indicates greater volatility in the market, with the range of each bar increasing. A reversal with a rise in ATR would indicate the force behind that move. ATR is not directional, so expanding ATR may indicate buying or selling pressure. High ATR levels are usua...

  The Currency Market The Forex market (also known as the Forex market) is a one-stop-shop where different participants operating in different jurisdictions around the world can buy and sell different currencies. This market plays a very central role in the management of international trade and the financial sector and serves companies and individuals by allowing them to buy and sell goods and services in foreign exchange and a smooth flow of capital. Currency markets operate 24 hours a day and have major participants in the form of large international banks, corporations, government agencies, retail participants, etc. Market participants enter the currency markets for a different purpose and together they make the market more liquid and efficient in the process. By operating 24 hours a day, the foreign exchange market offers the international banking system a greater opportunity to manage the current account and the capital account. Transactions, and as such, these markets are the...

Stochastic Oscillator Explanation The Stochastic Oscillator is a momentum indicator that can be used to determine entry and exit timing based on the overbought or oversold condition of the underlying financial instrument. Originally by Dr. Developed by George Lane in the 1950s, the concept was to compare the current price to the price range over a period of time. The indicator has three inputs based on the following formulas: calculation Slow% K = 100 [Sum of (C - L14) for the deceleration period% K / Sum of (H14 - L14) for the deceleration period% K] Slow% D = SMA of Slow% K OR: C = final diploma L14 = Lowest low of the last 14 periods H14 = higher for the same 14 periods % K deceleration period = 3 Overbought vs oversold One of the biggest problems and mistakes in trading is the misinterpretation of overbought and oversold. Now we will take a look at these phrases and see why there is no such thing as overbought or oversold. The stochastic indicator does not show oversold or overboug...

  Moving Average Convergence Divergence Moving Average Convergence Divergence, or MACD is one of the most popular momentum instruments or indicators used in technical analysis. This was developed by Gerald Appel in the late 1970s. This indicator is used to understand momentum and its directional strength by calculating the difference between two-time intervals that are a collection of historical time series. The MACD uses "moving averages" of two separate time intervals (mainly based on the historical closing prices of security), and a momentum oscillator line is obtained by the difference between the two moving averages, also called. it's called "deviations." The simple rule for calculating the two moving averages is that one should be shorter and the other longer. Typically, exponential moving averages (EMAs) are taken into account for this.     History The creation of the MACD as we know it can be divided into two separate events. Gerald Appel created the MAC...

What is the Relative Strength Index (RSI)? The Relative Strength Index (RSI) is a momentum indicator used in technical analysis that measures the extent of recent price changes to assess overbought or oversold conditions in the price of one stock or another. The RSI is displayed as an oscillator (a line chart moving between two extremes) and can range from 0 to 100. The indicator was originally developed by J. Welles Wilder Jr. and featured on Technical Trading Systems in his groundbreaking book 1978 "New Concepts". RSI calculation The careful calculation of the RSI requires a lot of very technical and complex explanations. To fully understand how the calculation is done, traders and analysts should read Wilder's own explanation. It appears in his 1978 book New Concepts in Technical Trading Systems. However, the index can be divided into a (fairly) simple formula: RSI = 100 - [100 / (1 + (average price change up / average price change down)] How does this indicator work? ...