Markets are fractal. Fractal markets mean that markets are identified by changes in behavior. That is where trading opportunities best lie. One of the ways to forecast changes in behavior based on past behavior and price is the Elliot Wave Theory.
Should You Trade Elliot Wave?
Elliot wave theory states that prices move in “waves” which are nothing more than the direction in which a price is heading. This tool allows you to categorize move into 3 with trends or impulse moves and two corrective moves or retracements before price likely changes its underlying structure.
Here is a non-specific chart on what Elliot Wave looks like:
Learn Forex: Using the Elliot Wave Oscillator to Predict Forex Moves
Waves or impulses are where trends occur. As a trader, trends are your friend. However, identifying trends worth trading is a different manner all together. Identification in real time is where most traders get frustrated and give up the process of using Elliot Wave. We encourage you not to stop digging when you’re three feet from gold and rather learn ways to identify wave patterns that work best for you.
The Elliott Wave Oscillator (EWO) is a specific tool to help you identify the trend and the overall market pattern to assist in finding future trading opportunities.