As traders, many of us are fascinated by the breadth and depth of technical analysis. Having the ability to decipher market patterns and identify potential opportunities can take your trading to the next level. This is where Elliott Wave theory comes in.
Jody Samuels, founder and CEO of FX Trader’s Edge, explained her Wavy Tunnel Pro strategy that combines the principles of Elliott Wave theory, Fibonacci, and price harmonics to provide a comprehensive view of market cycles.
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Key topics covered:
- What is Elliott Wave theory?
- What is the Wavy Tunnel Pro strategy?
- Identifying market cycles and price harmonics
- Building adaptability into your trading strategy
What is Elliott Wave Theory?
Elliott Wave theory is a form of technical analysis that suggests market prices move in predictable wave patterns when in a trend.
Developed by Ralph Nelson Elliott, this technique identifies recurring price movements, which consist of five waves in the direction of the overall trend (called impulse waves), followed by three corrective waves in the opposite direction.
These waves reflect the natural rhythm of market sentiment, alternating between optimism and pessimism. Traders use Elliott Wave theory to identify potential market reversals, trend continuations, and key levels of support and resistance based on wave counts and patterns.
What is the Wavy Tunnel Pro strategy?
The core idea behind the Wavy Tunnel Pro strategy is to use a set of moving averages—known as the "wave" and the "tunnel"— to help you identify the current phase of the market and make more informed trading decisions.
One of the most interesting aspects of this approach is the way this strategy manages the often tricky task of Elliott Wave counting. Instead of getting bogged down in the nuances of Elliott Wave theory, the Wavy Tunnel Pro strategy lets the indicators do the heavy lifting. By simply observing the behavior of the wave and tunnel, traders can gain valuable insights into the market's overall direction and potential turning points.
Another fascinating element of this theory is the use of the "bungee" indicators. These oscillators provide a visual representation of the strength and momentum of the market's movements, helping traders identify potential pullbacks or reversals. The way these bungee strands stretch and snap back allows for dynamic adjustments to different market conditions and captures the ebb and flow of market sentiment.
Analyze Trends Using Elliott Wave Theory
As traders, we’re always looking for innovative ideas and concepts to explore. These types of multi-faceted indicators and strategies are testament to the power of combining technical analysis with a deep understanding of market behavior and trader psychology.
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