Stock Trading.

Elliott Wave Theory and Market Timing

Elliott Wave theory is an outgrowth of the original technical market analysis of Dow Theory

Elliot Wave theory is a highly subjective form of technical analysis (market timing).

• The challenging part of Elliott Wave Theory is figuring out the relativity of the wave structure.
  
  
• Elliott concluded that the movement of the stock market could be predicted by observing and identifying a repetitive pattern of waves. In fact, Elliott believed that all of man's activities, not just the stock market, were influenced by these identifiable series of waves.
  
  
• Technical Analysis based on the Elliott Wave Theory of Market Timing breaks down impulse waves and corrective waves into five primary and three primary movements respectively. The eight movements comprise a complete wave cycle. Time frames can range from 15 minutes to decades
  
  
• Fibonacci numbers provide the mathematical foundation for the Wave Theory of Technical Analysis.

• For centuries, mathematicians-both amateurs and professionals-have been intrigued by the sequence of Fibonacci numbers. Bio of Fibonacci.

• Fibonacci series:
  From left to right after the first two numbers, the values increase successively. Each number, in turn, is determined by the sum of the previous two numbers.
  1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377,...

• Fibonacci numbers may be used in conjunction with other techniques to trade successfully. For example, fibonacci numbers can be used to gauge retracements against the trend for trade entry purposes, for placing stop-loss orders or for trade exits at a target price.

• Elliott theory technical analysis for QQQQ timing (AMEX: QQQQ), S&P 500 timing (AMEX: SPY), Dow Jones timing (AMEX: DIA) and technical analysis based on the volume of all index constituents works very well for index shifts timing.

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