The Ultimate Technical Analysis Handbook - Tradingportalen.com
The Ultimate Technical Analysis Handbook - Tradingportalen.com
The Ultimate Technical Analysis Handbook - Tradingportalen.com
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Chapter 2 — How To Confirm You Have the Right Wave Count<br />
few weeks of September, the market traded lackadaisically. Normally this kind of sideways price action would<br />
have bolstered the bearish labeling, because it’s typical of a corrective wave pattern that’s fighting the larger<br />
trend. However, given my overriding one-two, one-two labeling, we really should have been seeing the kind<br />
of price action that our wave count called for: sharp, steep selling in wave three-of-three.<br />
It was precisely because I noticed that the personality of the price action didn’t agree with the labeling that I<br />
decided to rework my wave count. You can see the result in Figure 5, which calls for a much different out<strong>com</strong>e<br />
from the one forecast by Figure 4. In fact, the labeling in Figure 5 called for a bottom to form soon, followed<br />
by a sizable rally. Even though the moderate new low I was expecting did not materialize, the sizable advance<br />
did: In early October 2005, Wheat rallied as high as 353.<br />
So that’s how I use personality types to figure out whether my wave labels are correct. If you follow the big<br />
picture of energetic impulse patterns and sluggish corrective patterns, it should help you match price action<br />
with the appropriate wave or wave pattern.<br />
[OCTOBER 2005]<br />
<strong>The</strong> <strong>Ultimate</strong> <strong>Technical</strong> <strong>Analysis</strong> <strong>Handbook</strong> — © 2009 Elliott Wave International<br />
This ebook includes handpicked lessons from more than 200 pages of EWI’s <strong>com</strong>prehensive<br />
Trader’s Classroom Collection of eBooks. Learn more here: http://www.elliottwave.<strong>com</strong>/wave/ClubTCC<br />
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