The Elliott Wave pattern is used to analyze financial market movements based on bullish and bearish cycles. Here is a summary of the main characteristics of each wave, their Fibonacci retracements, and the corrective waves (A, B, C):
Impulse Waves (1 to 5)
1. Then 1:
Initial upward (or downward) movement of the market.
Fibonacci retracements are generally not applied directly to this wave.
2. Then 2:
Fix Wave 1.
Typically between 50% and 61.8% Fibonacci retracement.
3. Then 3:
Bigger and stronger, driven by strong interest.
It generally does not exceed 1.618 times the length of Wave 1 in extension.
4. Then 4:
Minor correction after Wave 3.
Retracement between 23.6% and 38.2% Fibonacci.
5. Then 5:
Final bullish move in the impulse pattern.
It often reaches the 61.8% extent of Wave 3.
Corrective Waves (A, B, C)
1. Wave A:
First move against the prevailing trend.
Typically retraction between 38.2% and 61.8% of movement 5.
2. Wave B:
Correction within correction.
It can reach 50% or even 78.6% of Wave A.
3. Wave C:
Final correction movement.
Generally equivalent to or 1.618 times the length of Wave A.
This pattern reflects the natural interactions between impulses (waves 1-5) and corrections (waves A-C), always respecting Fibonacci proportions to identify support and resistance levels.
Doge's latest move is not necessarily characterized by an Elliot pattern, the second wave had its retraction exceeding 0.618, the fourth where it did not even retract to 0.382, so I would not say that it is an Elliot pattern, however let's imagine that cryptocurrencies do not follow exactly like assets on the stock exchange for example, and that this pattern below is an Elliot pattern👇🏻
What should we pay attention to then, if a wave A correction comes, breaking that bottom circled above on the chart, then a rise of 0.50 or even 0.618 of expansion in a possible wave B, also forming what we call a head and shoulder OCO, this could be a warning sign for a very powerful downward wave C, in this case it would be interesting to close the position and wait for the end of this cycle, for a new purchase order!
