Three Rules in Elliot Wave Theory
Here are three rules using Elliot Wave theory that you need to understand before using it for forex trading, of course. And it should also be noted that the most important thing to always remember is that our failure to determine the position of the elliot wave will drain part or all of the capital we use.
Three Rules in Elliot Wave
- First rule: Wave 3 is always longer than waves 1 and 5 in Impulse Wave.
- The second rule: Wave 2 will never fall under the first wave, wave 1 in the Impulse Wave.
- The third rule: Wave 4 will never fall below the initial price of wave 1 in the Impulse Wave.
Now you must remember the three important rules above when determining the trading position using Elliot Wave, especially determining 1-2-3-4-5 waves in Impulse Wave. And here are some brief guidelines but it may not apply when used to determine the position in Elliot Wave.
- Wave 3 moves very long, strong and sharp.
- Waves 2 and 4 more often bounce back on the Fibonacci retracement level.
- Sometimes wave 5 does not move past the endpoint of wave 3.