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Type 1
Used for buying at the end of a fourth-wave retracement
Rules:
- Wait for the Elliott Oscillator to pull back to zero. Historically, this happens 94% of the time in wave four retracements.
- Make sure the Profit-Taking Index (PTI) is greater than 35. A PTI greater than 35 indicates a good possibility of new highs in wave five.
- When prices break the channel, buy the market for a wave five rally.
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Type 2
Used for selling at the end of a fifth-wave rally
Rules:
- When wave five makes new highs, make sure the Elliott Oscillator shows divergence with its wave three peak. 94% of the time, this oscillator should pull back to zero in wave four.
- When five waves are complete, the market changes trend. Wait for the price to cross the channels and sell the market.
- The initial target is the previous wave four.
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