Using wave analysis in the market, a trader can most accurately predict price behavior in a particular time period. This type of analysis of the Forex market can become one of the most important indicators of success and an effective tool for a professional trader.
According to the Elliott Wave Theory, the price movement of any currency pair can be displayed on the chart in the form of waves. The waves are divided into three impulse waves, which are directed towards the main trend, and two corrective waves, which are directed against the trend. These waves are designated by the numbers 1, 2, 3, 4, 5. When the trend ends its active development, the price movement correction begins, which is displayed on the chart in three waves. Two of them are driving and one is corrective. These waves were designated A, B and C.
The essence of the wave analysis is that the price movement is natural, and the same model of the price "path" is constantly repeated. Applying wave analysis in the Forex market, it is possible to calculate the price behavior at a particular stage of the trend and, taking one of the waves into profit, close the deal in time, having received a profit. In order to reduce the risks of losses in the Forex market and correctly set the stop loss value, you should pay attention to the wavelength. Generally, the longer the impulse waves are, the longer the corrective waves will be.
The main difficulty in using Elliott Wave Analysis is to correctly identify the type of wave. In order to correctly predict the price movement, it is necessary to accurately identify which waves are impulsive, which are corrective. Corrective waves are usually the hardest to spot. The Elliott Wave Theory is applicable to any traded financial asset - from stocks and bonds to the EUR / USD currency pair.
Hello, dear readers of the site! From this review, you will learn what wave analysis of the Forex market is, what are its main features and what indicators of wave analysis are used by traders at the moment.
Wave theory, like others, cannot be perfect. This also applies to her overall performance. The Elliott Wave Theory can give a trader a completely normal forecast of price behavior in the market, that is, it is quite effective. But for a full-fledged and competent analysis and a more accurate forecast, you will need to use other important factors, in addition to the Elliott wave indicator.
So, in order to see a change in trend on the first wave and gain time to conclude successful financial transactions, you need to be able to do fundamental analysis. This will require an analytical mind to correctly interpret the news in the market.
Making a complete forecast of the financial market behavior and understanding - all this became possible thanks to wave analysis. However, in practice, the use of the wave theory is rather difficult, since each trader has his own motives of behavior. In this regard, it is extremely difficult to predict how the forecast made coincides with reality.
In addition, it is worth remembering that the final trading result may well not coincide with the thinking of many thousands of traders, as it will outweigh the large trading volumes of institutional traders. These traders have a completely different mindset, as they mostly do not work alone, but as whole teams.
Since Elliot's theory has come to the liking of many analysts and traders who are tired of wasting their time on the automation of analysis, additional tools have been invented and developed for comfortable trading for traders.
In trading on the currency exchange, wave analysis indicators have been used for a long time. They are easy to read by traders and based on their signals, it is quite easy to make trading decisions about opening deals.
The elimination of the so-called subjectivism is the main task of all indicators that can easily track a wave. When drawing up any wave counting, several traders may well make it up in very different ways. This is well known to everyone who has attempted to apply the theory of waves at least once. In this regard, a lot of time was spent to create a high-quality instrument that can determine waves based on many important factors from the Fibonacci grid to the main principles of wave theory, and for good reason.
This indicator is based on an indicator called the Zig Zag and looks for Wolfe waves. The wave analysis indicator Wolf Wave is looking for the required wave that formed from the extremum and completed the formation or breakout of the previous cycle.
Elimination of unnecessary noise and significant simplification of the price chart are the main features of this tool. Elliott Wave Trend makes identifying key peaks much easier.
This indicator determines the extremes that are characteristic of the third wave. The Elliott Wave AdvGet indicator belongs to the class of so-called oscillators and easily identifies the necessary extremes.
These indicators are available at and are freely available for download on the Internet. In general, there are many more indicators for wave analysis, but the ones most used by traders today have been described above.
This concludes our review of what wave analysis of the Forex market is and what indicators of wave analysis traders use in their trading activities, we wish you success and profitable transactions in the financial markets!
Wave analysis is one of the most popular methods for determining the current situation on the. The basis of this technique of technical analysis is the currency charts on which the price level moves. The price movement on the chart during the analysis is usually subdivided into sub-waves and waves, which are used to predict the movement of the price level.
If you decide to use Forex wave analysis to determine the current situation in the foreign exchange market, you must remember the following rules:
Wave analysis of currency pairs has a rather low degree of formalization, for this reason, the conclusions drawn using this method of market research are subjective. This is because the situation in the foreign exchange market is constantly changing, for this reason, the analysis results are relevant only at the moment they are received.
When conducting wave analysis, it is customary to distinguish two main types of waves:
Practice shows that the optimal moment to create an order is the beginning of an impulse wave, but, unfortunately, it is very problematic to identify its base. When using an impulse wave for trading, in order to avoid the occurrence of serious losses, it is recommended to set Stop-Loss at its base.
Almost all professional traders use wave analysis to predict changes in the price level, since this method is significantly superior to other analogues in terms of accuracy and efficiency.
Any fluctuations in the price level form waves. At the moment of inception, any tendency consists of five waves; in the course of development, it acquires a three-wave structure. After that, the trend can either continue or reverse.
According to wave theory, the third wave is the longest, which is usually denoted by the number "3". It is this wave that provides the most opportunities for creating orders.
During the movement of the price level, impulses always alternate with corrective waves. Momentum always has five waves: waves 1, 3 and 5 move the price level in the direction of the trend, and waves 4 and 2 reflect a correction.
The picture above shows a downward momentum. Waves marked with numbers 5, 3 and 1 move the price level down, while waves marked with numbers 4 and 2 have a direction opposite to the trend and are corrective. For a standard impulse, a situation is typical when the second wave does not go beyond the first, but the fourth after the third. The exception is situations when such figures as a wedge and a diagonal triangle appear on the chart, since the waves in them cross each other. After one impulse ends, it is followed by a correction or a new impulse that will have the opposite direction. In the picture above, you can see that after the completion of the downward impulse occurs.
In the above picture, you can see the wedge chart pattern, which is usually the first wave of impulse. After a wedge is formed on the chart, a powerful price movement occurs.
In the picture above, you can see an example of a corrective wave called Zigzag, which includes three waves. Usually the zigzag is the second wave of the impulse. After it appears on the currency chart, it is highly probable that the price level will soon make a strong jump towards the main trend.
Despite the fact that the method for analyzing the market situation described in this article is quite effective and accurate, it cannot be called simple, since the results obtained are subjective and directly depend on the qualifications and experience of the trader. For this reason, it is more suitable for professional traders than for.
If you decide to use the wave analysis of the market for trading on the Forex market, it is recommended to test it on, otherwise, you may incur significant losses due to an illiterate assessment of the situation on the currency chart.
I hope this article helps you become a truly successful trader.
The main idea of the wave analysis of the Forex market is that the price movement in any market is characterized by a wave-like character, which makes it possible to predict the development of the situation in the future. Wave analysis of Forex from the world's leading brokers, provided to the client, helps to calculate preliminary variations in the continuation of the price movement, the minimum and approximate potential of the available options, and knowing the signs of their confirmation - use any of them to make a profit, clearly realizing which wave is being taken to get profit. and drive that particular wave until the close of your trade. There are two types of waves: impulsive and corrective, since the price movement is divided into two wave groups:
Wave analysis of the Forex market distinguishes several ways to determine the wave when it is plotted on the chart: at the close of the price, at the maximum price, at the minimum, or by its average value. For newbie traders who have just started using the Forex wave analysis, the best way to plot the price on the chart is to combine the maximum price with the minimum, and vice versa, the minimum with the maximum. In this case, the wave designation becomes visible, in addition to everything, the trader quickly masters charting skills.
To reduce the risk of losses in forex wave analysis and to correctly calculate the stop loss size, special attention should be paid to the wavelength. The experts of the wave analysis of the Forex market confirm that the longer the impulse waves, the longer, respectively, and the corrective ones.
