BTC - How to predict future price action using any 5 wave EW
I would like to introduce a method I trade with. Many pieces of this have been taken from other great traders although parts are of my own discovery. After reading this post I recommend studying Elliot Wave theory and getting proficient in identifying 5 wave moves. Jim Of All Trades on Youtube is a great teacher in EW.
Every chart is traded on two axis. Price and Time. Most traders don't give any attention to the time axis. Here is a BTC 12hr chart I drew a couple months ago and have been updating on TV. We are breaking up individual Elliot Waves and pulling fib circles along them. The circles act as support and resistance for waves and sub waves. If we quarter the chart like a pie, price action reacts differently to rings depending which quarter it is in.
1. Become proficient in identifying 5 wave Elliot wave moves. EW is a life long journey but if you can identify any 5 waves you can trade with this.
2. Chart any completed 5 wave move you can find.
3. Pull Fib rings from the start of the 3rd wave to the end of the 5th wave.
4. Tighten up the rings so they hug price action. The way the TV tool places them is a little wider than ideal so you are going to snug them up and shrink the rings a little bit. (You are going to have to adjust the end points of the tool, they are never exactly at highs and lows. Remember fit the rings to price action)
5. Obviously since you are pulling 5 waves this method is only helpful after the 5 waves are completed.
6. Then you layer the primary ring waves over the sub ring waves. You will get support and resistance lines that help you predict price movement.
7. This method gets really good when you start laying possible EW counts over the rings or use it to identify tops and bottoms or moves. I like to add other indicators like Order Blocks. When a 4hr OB appears and price action is on resistance/support they play out really nicely very frequently.
8. If you were starting out with this I would recommend using a low leverage and playing the longs/shorts to get used to how it works.
9. Generally the times when this does not playout is when one ring interferes with current price movement and I have not accounted for that or had the ring hidden on my chart. You can imagine it quickly becomes messy with 5 for so sets of rings interfering. I have traded these all the way down to the 1min chart but the moves are so small that you would really need trade 100x and close quickly. I prefer to trade the 15min+ TFs with 10-25x leverage but don't let my risk tolerance affect you at all.
