To identify an Elliott Wave on a chart, select the Elliott Wave tool from your Advanced Charting toolbar. Click on the first point to place. Continue throughout the wave by clicking on each point 1-5 and ABC to place. When you get to the last point, C, the drawing is complete.
The Elliott Wave theory was developed by Ralph Nelson Elliott. He suggested that the market behavior is based on waves rather than random timing. He believed that market prices rose and fell in a series of waves based on the same Golden Ratio or Golden Mean that Fibonacci proved.
Interpretation
The basic idea of the Elliott Wave theory is that a market rises in a series of five "waves" (as he called them), and a market declines in a series of three declines. Elliott’s said the market rises on the first wave, declines on the second, begins to rise again on wave three, has a period of decline again on wave four, and finally completes the rise on wave five. The period of correction is referred to as a three-wave correction where the market declines for wave A, begins to rise for wave B, and falls again for wave C.
Elliott went on to further explain that a complete market cycle consisted of a 144 wave cycle, broken down into an 89 wave bull cycle, and a 55 wave bear cycle. This is based on his observation of Fibonacci’s Golden Ratio. The series of numbers Fibonacci describes shows a relationship of 1:0.618. Elliott further showed that a market usually rises or falls based on this wave cycle. Each wave in the cycle has its own characteristics.
Five Wave Advance
One: Normally very short and easy to miss.
Two: A retracement wave. Gives back all or most of what the first one gained.
Three: Usually very prominent. Follows a period of what appears as a consolidation, most people trade this wave.
Four: Noted to be very intricate, yet still a consolidation. One of Elliott’s main rules is that in a five-wave advance cycle, wave four can’t overlap wave one.
Five: Often very active. At some point declines and lead to the three wave corrective cycle.
Three Wave Decline
A: Normally seen as a minor pullback of wave five of the advance cycle.
B: Follows A of the downtrend and is often hard to spot. Should result in a third wave continuing down.
C: Usually quite significant and many traders see this as a selling opportunity. The price bars form a perfect symmetrical triangle shape.
Select the drawing by clicking on it. You will know the drawing is selected when boxes appear at the corners. Click on a box and drag it to your desired location. Release the mouse button to place.
Select the drawing by clicking on it. Drag to the new location and release the mouse button to place.
Select the drawing by clicking on it. Press the Del (Delete) key on your keyboard. You can also right-click the drawing and select "Delete" from the dropdown menu.
Select the drawing by clicking on it. The properties will appear in the preferences section of your control panel.
1. Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.
2. Line: From here you can choose the color, line style, and line thickness.
3. Font: Select the font, size, and color of the text. You can also choose to bold or italicize.
4. Show Text / Show Arcs/ Snap / Always Show Lines: Select the checkbox next to Text and Show Arcs to hide/show the text and arcs on the chart. Select Snap to snap the Elliot Wave Tool to price bars. Select Always Show Lines to display a line between each Elliot Wave Point
5. Points: Change how the points of the Elliot Wave are labeled from the points drop down dialog box.
You can apply this theory to your charts by selecting the Gann Fan from drawing tools toolbar. Click where you want the Fan to start and continue to hold down the mouse button until reaching the top-right position of the fan. Release the mouse button to place.
W. D. Gann designed several techniques for studying price charts. One of these included the use of geometric angles in conjunction with time and price. Gann believed that specific geometric patterns and angles had unique characteristics that could be used to predict price action.
Gann’s techniques require that charts be drawn with equal time and price intervals, so that a rise/run of one price unit for each time unit (called a 1 x 1 trend or angle) will equal a 45 degree angle anywhere on the chart. Gann believed that the ideal balance between time and price exists when prices rise or fall at a 45 degree angle relative to the time axis.
Interpretation
A Gann Fan is used to define a market direction or a new trend. For example, a bull market exists if prices are maintaining strength between the 1x2 lower line and 1x2 higher line. A bear market would be the exact opposite of the previous scenario. The Gann Fan is made up of nine angles based on this concept. These trend lines are used to indicate support and resistance levels. When one line is broken (by the entire days price range) prices should move to the next line. The drawing of these lines should start from either a market top or bottom.
It is important to note that this theory is based on a squared 45 degree angle on the chart. Obviously, a 45 degree angle drawn on a chart is no longer 45 degrees when the scale is changed without a change to the opposite scale as well. To "square" the Gann Fan to the current chart’s scaled settings, hold down the CTRL key on your keyboard while clicking and rescaling with the mouse pointer. Some Gann experts have reported that to get a truly "squared" chart, one must set the scaling to 8 price bars per inch for the width and 4 price bars per inch for the height.
Select the drawing by clicking on it. You will know the drawing is selected when boxes appear at the corners. Click on a box and drag it to your desired location. Release the mouse button to place.
Select the drawing by clicking on it. Drag to the new location and release the mouse button to place.
Select the drawing by clicking on it. Press the Del (Delete) key on your keyboard. You can also right-click the drawing and select “Delete” from the dropdown menu.
Select the drawing by clicking on it. The properties will appear in the preferences section of your control panel.
1. Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.
2. Line: From here you can choose the color, line style, and line thickness.
3. Font: Select the font, size and color. You can also choose to bold or italicize your text.
4. Snap: Select to have the drawing snap to the price bars.
You can apply this theory to your charts by selecting the Andrews Pitchfork from your drawing tools toolbar. Click where you want the handle of the pitchfork to be (at the end of the previous trend). Your next two clicks will form the base of the fork, or the tops of the next two trends. You can elongate the pitchfork to the length desired. Click to place.
Dr. Alan Andrews developed a channel technique to show areas of support and resistance from a baseline. This use of a median line is the key to using the Andrews Pitchfork. Buying near lows and selling near highs that are identified by the "tines" of the pitchfork. The basic premise is to trade the channel from one level of support or resistance to the next.
Interpretation
The first element to draw the Andrews Pitchfork is the centerline. The middle tine, or median line, begins at the most recent contract low or high. To plot the direction of this point we must attain the other two points. The top tine is determined by looking at the highest move made from the origin of the contract low or high. The next point is found by looking at the retracement of that move. For example, a contract begins at point A, rallies to point B, and sells off from point B to point C. A line is drawn from point B to point C, and the line originating at point A splits those two lines equally.
This pitchfork shows continuing points of support and resistance. The general use of this tool is to sell when the market rises to line B, take profits once prices reach line A, and buy when prices dip to line C. This series of movements within the pitchfork affords traders the opportunity to trade a channel system within a trending market.
Select the drawing by clicking on it. You will know the drawing is selected when boxes appear at the corners. Click on a box and drag it to your desired location. Release mouse button to place.
Select the drawing by clicking on it. Drag to the new location and release the mouse button to place.
Select the drawing by clicking on it. Press the Del (Delete) key on your keyboard. You can also right-click the channel and select “Delete” from the dropdown menu.
Distance scaling is determined from the starting point of the Pitchfork handle to the middle cross line.
Select the drawing by clicking on it. The properties will appear in the preferences section of your control panel.
Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.
Line: From here you can choose the color, line style, and line thickness.
Show Extensions: Select the box next to the number of extensions you wanted added to your pitchfork drawing. The odd numbers are placed below, even numbers are placed above.
Font: Select the font, size of font, and color of the text. You can also choose to bold or italicize your text. Select the checkbox next to Show Text to hide/show your text on the chart.
Snap: Allows the tool to snap to price bars when moved.
To measure the different retracement levels within a market, select the Fibonacci Ruler tool from your drawing tools toolbar. Click on the chart where you would like the ruler to begin. Hold the mouse button down and move to the lower right position of the rule. Release the mouse button to place.
Fibonacci Retracement levels correspond with percentage retracements that occur in the ebb and flow of a market trend. According to the Elliott Wave Theory, market trends tend to occur in five distinct waves. See the Elliott Wave section for more information. Elliott asserted that these counter-trend waves will usually retrace against the trending waves by 38.2, 50, and 61.8 percent. These retracement percentages correspond to natural ratios discovered by the Greeks called the Golden Ratio and rediscovered by Fibonacci, a medieval Italian Mathematician.
Interpretation
Commodity prices will frequently consist of an initial wave, a second wave (often retracing 61.8% of the initial move), a third wave (usually the largest), another retracement, and finally a 5th wave (the last gap), which would exhaust the movement.
In Track ‘n Trade Live, you have three tools that you can use to apply these concepts: Fibonacci Retracement, Fibonacci Time Zones, and Fibonacci Arc.
Select the drawing by clicking on it. You will know the drawing is selected when boxes appear at the corners. Click on a box and drag it to your desired location. Release mouse button to place.
Select the drawing by clicking on it. Drag to the new location and release the mouse button to place.
Select the drawing by clicking on it. Press the Del (Delete) key on your keyboard. You can also right-click the drawing and select “Delete” from the dropdown menu.
With your Preferences Tab open, select the drawing by clicking on it. The properties will appear in the preferences section of your control panel. You may also right-click the drawing and select Properties to open the Fibonacci Ruler preferences within the Preferences Tab.
Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.
Line: From here you can choose the color, line style, and line thickness
Background: Select the color you want for the background of the Fibonacci Ruler.
Fib: Default Fibonacci Ruler. Check, blue square, or uncheck to show, customize or hide Fibonacci lines.
Retracements: Check Retracements to display Fibonacci retracements values on your drawn Fibonacci Ruler.
Projections: Check Projections to display Fibonacci projection values on your drawn Fibonacci Ruler.
Predictions: Check Predictions to display Fibonacci prediction values on your drawn Fibonacci Ruler.
Time Zones: Check Time Zones to display Fibonacci time zone values on your drawn Fibonacci Ruler.
Squaring / Division: Choose between displaying the Fibonacci Ruler being calculated as squared (78.6%) or displaying it as a division (76.4%).
Font: Select the font, size of font, and color of the text. You can also choose to bold or italicize your text. Select the checkbox next to Show Text to hide/show your text on the chart.
Snap: Select to have the Fibonacci Ruler snap to price bars when moved.
Checked: line will appear with default Fibonacci values.
Blue square: line will appear with option to enter custom percentage value.
Unchecked: line will not appear within Fibonacci Ruler on chart.
To measure the different retracement levels within a market, select the Fibonacci Arc tool from your drawing tools toolbar. Move the mouse pointer to the point on the chart that will be the corner of your arc. Hold the mouse button and drag to your end point. Release the mouse button to place.
Select the drawing by clicking on it. You will know the drawing is selected when boxes appear at the corners. Click on a box and drag it to your desired location. Release the mouse button to place.
Select the drawing by clicking on it. Drag to the new location and release the mouse button to place.
Select the drawing by clicking on it. Press the Del (Delete) key on your keyboard. You can also right-click the drawing and select “Delete” from the dropdown menu.
Select the drawing by clicking on it. The properties will appear in the preferences section of your control panel.
1. Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.
2. Line: From here you can choose the color, line style, and line thickness.
3. Font: Select the font, size of font, and color of the text. You can also choose to bold or italicize your text. Select the checkbox next to Show Text to hide/show your text on the chart
4. Snap: Select to have the tool snap to price bars when moved.
The Fibonacci Time Zone uses Fibonacci numbers rather than the percentages used in the Ruler and Arc tools. Select the Fibonacci Time Zones from your drawing tools toolbar. Click where you want the upper left point. Hold the mouse button and drag to the bottom right position. Release the mouse button to place.
Select the drawing by clicking on it. You will know the drawing is selected when boxes appear at the corners. Click on a box and drag it to your desired location. Release the mouse button to place.
Select the drawing by clicking on it. Drag to the new location and release the mouse button to place.
Select the drawing by clicking on it. Press the Del (Delete) key on your keyboard. You can also right-click the drawing and select “Delete” from the dropdown menu.
Select the drawing by clicking on it. The properties will appear in the preferences section of your control panel.
Restore Settings: TNT Default will change your settings back to the original software settings. My Default will change current settings to your personalized default settings. Apply To All Charts will apply your selected settings on all open charts. Save As My Default will save your current personal settings.
Fib Time Zone Tool: You can choose the color, line style, and line thickness of your lines.
Font: Select the font, size, and color of the text. Select Show Text to hide or show your text on the chart.
Select Snap to have your lines snap to price bars when moved.