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The Elliott wave principle was developed by R.N. Elliott in his 1938 book, The Wave Principle. The Elliott wave principle is a form of technical analysis that attempts to analyse financial market cycles and forecast market trends by looking into extremes in investor psychology expressed by highs and lows as well as prices and several other factors.
This article serves as a basic introduction to Elliott wave theory. A basic 5-wave impulse sequence and 3-wave corrective sequence are also explained. While Elliott Wave Theory can get more complicated than this 5-3 combination, this article will only focus on the very basics.
Basic Sequence
There are two types of waves in the sequence that is the impulsive and corrective phases. Impulsive waves move in the direction of the larger degree wave. When the larger degree wave is bullish, advancing waves are impulsive and declining waves are corrective. When the larger degree wave is down, impulse waves are down and corrective waves are up.
Fig 1: Elliot Wave – Basic 5 wave sequence.
Fig 1 above shows a rising 5-wave sequence. Waves 1,3 and 5 are impulse waves because they move in the same direction with the trend, where…
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AAAnya avatar
AAAnya 26 July

Nice one!

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daniellabas avatar

Good job

thedoctor avatar
thedoctor 17 Aug.

good article!

anvifx avatar
anvifx 28 Aug.

Good article!

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1.0 Introduction

This article will help you become a better Forex trader in the year we have already stepped in. the new technologies and the new atmosphere is going to bring certain changes in every aspect of our life, so is going to happen with the forex.
People often get tired before reaching their goal in most of the things they do, and often it they are unaware how close they were. With traders, it is the same thing; many times you have been so close to getting a score, but maybe you missed something – even a minor step – simple that could lead you to a door of success. Knowing how to avoid such mistakes, well, not only small ones, but major ones too, are going to give you huge advantage towards your goal. And your goal is everybody’s – success. Learning is – some say – best from mistakes, preferably from other people’s mistakes, not your own. Some traders will dig and dig until they have something worthy, but some will give up after a series of unsuccessful attempts. The sad part is that you never know if you needed just another trade before turning your wheel of fortune towards your success. This article might help you overcome moments of impatience and help you recognize…
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nahimkha avatar
nahimkha 26 Feb.

Good article. nice work.

benjudefx avatar
benjudefx 27 Feb.

Dukascopy Movers & Shakers widget shows only daily stats. How I can see hourly basis?

albertpip avatar
albertpip 27 Feb.

How much do you earn per year ? Trading journal in this article shows small number of pips per month.Great work.

Likerty avatar
Likerty 28 Feb.

I found Elliot wave interesting, but a secondary tool after all.. Main draw is that this approach is too abstract and it misses a lot what's in between as bids/offers comes and PA moves around before reaching/producing reference points to analyse

mostofaah avatar
mostofaah 28 Feb.

I dont use Elliott wave theory but I think when we use Fib. levels on some way we are using Elliott wave theory too because it is related.

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The EURUSD has been in an uptrend since July 2012. Recent monetary policy changes have triggered a sell off in the pair creating speculation that the uptrend has concluded, The reversal in progress, has the capacity to take the pair much lower, this article will shed some light on the catalyst required to drive the trend change, as well as a trade plan.
Fundamental Outlook
Disinflation remains a concern for the Eurozone. HICP is the measure of inflation used by the ECB. The most recent reading came in at 0.5%, while targets are to be as close to 2% without going over.
Figure 1.1 - HICP on steady decline after a high of 3% posted on September 2011
The ECB has several different tools for battling disinflation. In April, an attempt at verbal intervention was made. See my blog post from April 12 - Possible EURO sell off at Open for details. The results was a 20 pip gap down, followed up with a 2 day sell off taking the pair 90 pips lower. The method proved to be ineffective as buyers stepped in and did not allow the pair to close lower.
The ECB Press conference on May 8, however had a major impact when Draghi indicated a clear time frame for when action would be taken.
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FXdream avatar
FXdream 16 July

nice work

sonjatrader avatar

Very interesting!!! Thanks

khalidamassi avatar

Good work.

sukeshroy avatar
sukeshroy 21 July

Very good article for finding combination of profitable orders using fundamental and technical analysis both.

Jignesh avatar
Jignesh 23 July

UPDATE - The trade idea is invalidated at this point with the daily close below 3500.  There is still a possibility of an irregular expanded flat, and I do like the setup with revised targets of 1.3750, but at this point the trade carries much less conviction.  it's worth keeping an eye on USDCHF for direction at this point to see if it breaks the high

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This is a follow up on last month’s article “Elliot Wave on EUR/AUD”. I think that it is wise to read them both in order to understand this month’s article better. The idea behind this article is to show how more than one tool or indicator can play together, and give one more confidence before reaching a conclusion, about the markets. Later in this article there will be examples of, ways to combine “Elliott wave” and “Japanese Candlesticks”. This article will not go in details with “Japanese candle sticks” or “Elliott Wave”, and this is because there are tons of free materials out there if you wish to study about these subjects. This article is mostly about combining a few tools to get a better analysis. In This case “Elliot Wave” and “Japanese Candlesticks”.On the monthly chart below is a “Dark cloud cover”, at the highlighted blue area. Since this pattern appeared at a support level from back in late April, it might be considerable to cover longs for a bit at least. Notice also that the move from back in May started with a “Piercing Line” pattern which is the direct opposite of a “Dark cloud cover” pattern (Look at the illustrations at the end of this article).Below is a weekly c…
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Delossan avatar
Delossan 5 Apr.

Thank you Efegen! Yes, I usually, with other indicators and tools as Japanese Candels, MACD and William% R.

khalidamassi avatar

"I don’t believe that any theory or indicator is 100% right when it comes to trading in real life. I think that combining a few tools gives better results at the end of the day" that's great

This conclusion is very important and needs years of experience to understand , thank you Delossan , I am very supportive for you +++

drishti avatar
drishti 8 Apr.

Candlestick patterns are really good , and I found effective with great risk and reward ratio trade. Nice article. +1

scramble avatar
scramble 24 Apr.

i'm for the candlestick patterns, but in large time frames h4 and above! nice article!

SpecialFX avatar
SpecialFX 29 Apr.

I've never really gotten into Elliott Waves, but for some people they seem to work very well :)however, the lesson of this article is to use and combine trading tools that improve our odds of being profitable :)

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