UNDERDOG-29

how to trade through elliot wave

Education
NSE:TATAMOTORS   TATA MOTORS LTD
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5
First thing to do is to identify the time frame that one is comfortable for trading or investing there money for,accordingly one should select time-frame for labeling waves.Here i have tried to label from cycle to minor degree.Analysis below is targeting Primary degree wave 5 upward movement that might unfold in near future.

As mentioned in every book or article on elliot wave theory one should start labeling from an important low or high,hence i have taken covid lows for reference.I have tried to follow impulse labeling rules given in elliot wave theory and have labelled degrees according to time frame given in the books or in the material available online.

Reasons for impulse wave counts:

1)Primary wave 2 has not retraced primary wave 1 by more than 100%
2)Primary wave 3 has extended almost 261.8% of Primary wave 1

Current wave counts

Cycle : wave 1
Primary : wave 4
Intermediate : wave C
Minor : wave 5

Current Struture

Primary wave 4 Regular Flat ABC correction(3-3-5)

Logic for Demand zone between 284-266

1) Price support @ 284
2) 100% Extention of Intermediate wave A from wave B top @284
3) 38.2% Retracement of primary wave 3 @ 269
4) 123.6% Extention of Intermediate wave A from wave B top @266
5) RSI seems to be making positive divergence

Entry Signals

1)Look for bullish reversal candle like Doji , Hammer ,Piercing, Engulfing pattern in the target zone marked for Primary wave 4
2)Next day price should cross the high of the reversal candle during the trading hours and should sustain above it through out the day(Take 30% position when it crosses the high),if it manages to close above the high of reversal candle then take rest of the 70% position.Additional confirmation will be of minor 2-4 trendline breach and price closing above minor wave 4 highs and 10 day SMA .
3)Keep a SL of reversal candle low on closing basis and size your trade accordingly in order to not to loose more than 1% of your trading capital
4)Target zone for primary wave 5 is 357-380,as it is primary degree that we are expecting to unfold price might take 2-3 months to hit the target zone.

This post is for some one who is interested in trading stocks or indexes through elliot wave theory.I have tried to show how to label waves of different degrees and have mentioned trade setup that one should look for and have also mentioned position sizing logic.

Hope anyone reading this post find the information useful.
Trade active: Yesterday we had hammer candle stick pattern which is followed by continued buying,today when price went above 282 long trade was active with 268 as closing stop loss on the down side

Comments

excellent analysis. Do you trade solely on this strategy only?
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UNDERDOG-29 depanjaldas
@depanjaldas, yes,earlier i use to trade breakout's through classic technical analysis,more often then not it use to a fake one,then i started entering on re-test of the breakouts it worked nicely but some times you miss momnetum, also you need to be watching market for whole day to catch a re-test and for some one like me who is a part time trader it was difficult.I found chasing market to be professionals act and you need technological support for trading momentum which a retail trader doesnt have so i adopted swing trading strategy where in i tried mixing candlestick pattern,Momentum indicators,Sometimes SMA averages and some basis charting tools like channels,trendlines and Fib retracements and extention.Off late i have been learning and practicing elliot wave analysis which has given me answer's that i was looking for in terms of good entry/exit points.Add to it risk-management and position sizing strategy you are good to go.
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depanjaldas UNDERDOG-29
@UNDERDOG-29, thanks man! for taking time out as I can see that you are a busy guy. Your reply is very helpful. May God bless you.
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Good detailed presentation. Looking forward for this kind of presentation in future also.
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UNDERDOG-29 vihaanduttacjs
@vihaanduttacjs, thanks.
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