Steve Ruffley
SteveRuffley.com
Summary
The Elliot Wave theory is another great example of a technical analysis tool that relies on the ‘self-fulfilling’’ nature of trading. The trick with interpreting the Elliot wave in my opinion is certainly on the 3rd wave. The Elliott Wave Principle posits that collective investor psychology, or crowd psychology, moves between optimism and pessimism in natural sequences. These mood swings create patterns evidenced in the price movements of markets at every degree of trend or time scale. In Elliott's model, market prices alternate between an impulsive, or motive phase, and a corrective phase on all time scales of trend, as the illustration shows. Impulses are always subdivided into a set of 5 lower-degree waves, alternating again between motive and corrective character, so that waves 1, 3, and 5 are impulses, and waves 2 and 4 are smaller retraces of waves 1 and 3. Corrective waves subdivide into 3 smaller-degree waves starting with a five-wave counter-trend impulse, a retrace, and another impulse. In a bear market the dominant trend is downward, so the pattern is reversed—five waves down and three up. Motive waves always move with the trend, while corrective waves move against it. Personally I never trade the Elliot wave on the way up, only on the way down. This is a much more robust way of making sure you apply the correct rules and make maximum profits. I will show you how I trade, then you will not be trading the ‘theory’ but the resulting price correction and action.Latest Live Videos
Editors’ Picks
EUR/USD trims gains, reclaims 1.1600 and beyond
Following an earlier drop to yearly lows around 1.1530, EUR/USD now manages to recoup part of the ground lost and reclaim the area above 1.1600 the figure in the latter part of the NA session on Tuesday. Meanwhile, the pair’s marked retracement comes in response to the unabate march norht in the US Dollar, always propped up by the intense flight-to-safety environment amid the deteriorating geopolitical landscape in the Middle East.
Oil gives away some ground, breaks below $75.00/bbl
After an initial move to to levels not seen in over a year close to the $78.00 mark, prices of the barrel of WTI now face some downside pressure and return to the area below $75.00 on Tuesday. The sharp advance in WTI continues to draw support from escalating geopolitical tensions in the Middle East, the effective shutdown of shipping through the Strait of Hormuz, and mounting concerns over supply disruptions.
Gold bounces off lows, back above $5,100
Gold remains on the defensive, eroding part of the recent multi-day advance and managing to trade back above the $5,100 mark per troy ounce on Tuesday. The precious metal initially dropped just below the critical $5,000 threshold on the back of the persistent strength of the Greenback, higher US Treasury yields across the curve and investors' repricing of Fed rate cuts.
Crypto Today: Bitcoin, Ethereum, XRP pull back as sentiment remains in extreme market fear
The cryptocurrency market is broadly in the red on Tuesday as the Middle East grapples with an escalating war. Bitcoin (BTC) is in a pullback, trading below $67,000 at the time of writing, and most altcoins follow suit.
Energy shock 2.0: Why rising Gas prices could hit the Euro Premium
Even without a confirmed, sustained disruption, the mere risk to a key global energy chokepoint is enough to inject a significant premium into European Gas markets. And for the Euro, that matters.
Here is what you need to know on Tuesday, March 3:
The US Dollar continues to gather strength against its rivals following Monday's bullish action, with the USD Index fluctuating at its highest level since late January above 98.80 in the European morning on Tuesday. The European economic calendar will feature preliminary February Harmonized Index of Consumer Prices data later in the day. Nevertheless, market participants will remain focused on news surrounding the crisis in the Middle East and pay close attention to comments from central bankers.