So now after our Fibonacci module, I want to talk with you about the Elliot wave theory. And the Elliot wave theory is from his founder, Elliot, Elliot. And he found out that every chart, and every share stock index ever, in every time moves in waves. So what are these waves? If you see, and you'll see me writing many times Charles on this board. So what I normally do is this, so I'm making charts.

So this is normally a chart and you simply say, okay, there are ways can every child moving in waves and that's completely true. That's a simple thing. Normally all shots moving in waves, but we need to know in which wave we are. And these waves are always in trend following systems and follow completely the Fibonacci rules. So, we have the three combination of our last capitals and was the waters aliens find out. So, he said, when he found out that in every trend in every intact track, we have five impulse waves and three correction waves.

So, what are the impulse and correction waves, if you look closer to the chart, you will see this directly and for now, in every chart, you will look you will always see those waves. So the impulse waves are in this case, along with long upside waves here. We have Five impulse waves and also we have three correction waves. What we need to know is that we want to know in which in which time we are. So let's say this first part here could be champ picture from three months, but in this long impulse wave can also be 10 or 20. Other formations like that, Okay, so first we need to find out in which time we are and then which wave we are.

And there are many rules for the Elliot wave theory. And just for short, normally, the second and third waves are the most powerful So, we also spoke about the momentum and maybe you remember the power forms of an intact trend. So, the second and the third should be the strongest one and also we have the rules of the normal trending. So which easily means that we have the higher highs okay and the lower lows can also make the trend line. So, there is a few combinations. So they are few combinations from trading theories and practicing.

Yeah, trend following systems. And we will see us now the completely Elliot wave theory, practically in our trading view software. Now we want to see the Elliot wave theory in real and also life Cause in the last day, I'm looking for the DAX, the German German index and calculated if we have here, the Elliot waves so this video was Elliott plan for the practicing module. However, you will use it now. And I am making the updates for this later so you can find the updated version for this video in the practicing module. So first, this is the five impulse wave.

And you find it here on the left side patterns and they have the impulse wave the correction waves of triangle waves come on waves, but we're normally only using the impulse waves and correction waves. And I started a new one. delete this. So, yeah, a few days earlier I started here and make the first and the second point. So that's what happened. If I calculate it, okay.

And it was here, here around, there was the point I making the waves. So I thought the third wave would be here. However, it's even higher now so we can put it over there. And now we need to fix the rest, and we will fix them now together. And yeah, let's start with the aliens. wave theory.

So first of all, the Elliot wave theory has a little bit complicated roots. And the first one is that we need to compare in which time index the trend is. So let's make this easy. Normally, if you have a trend and this trend would be three days long, actually, the trend should be intact for at least five days until the trend is going in a different direction. And also you can say if we interact in tech trend, for five days, a trend shouldn't shouldn't go in a different in a different way until the eighth day so you can maximize that for for months and years. But for principle thing you need to understand that we have clearly time in Nexus in the Elliot wave theory.

And the next one and the first Mayer rule is that the wave comes up if we have an change of mirrors to bullish or bullish to bearish trend. And this is what you can see here that we have earlier and bearish trends. So they sold out the market. The price is falling until this point where we have to change and we're starting a bullish trend. And we can also compare here the momentum strategy I hope that you remember or momentum strategy. And what you can see on this point here is that we have the change in the momentum.

So we have a really low point here, not very power, very much power in the market. And there is a point with change in the new trend begins. So, that's our next indicator which we can compare to the Elliot wave theory. And let's close this. And we also want to compare the normal trendline so we go there and making our trendline over here. And that would mean that our Fourth impulse wave should be there anywhere.

That's for the trend line, we can also making up on one and then anywhere so far upper trend line. And the next rule and Elliot theory is that the second wave could be a correction up to 100%. But normally it should be not more than 60%. So what does it mean? If we want to compare more than one trending system then we could say that under The lower trendline would be definitely broken if we had a 100% correction. So that means from here, our starting point up here would be 100% correction back to this point, okay?

That would be the hundred percent correction. And if that would be happen, we couldn't compare this strategy with the trend lines. But however, normally it shouldn't not correct more than 60%. And let's have a look. We can use here this price range thing again. And look that's around 10% here and go on disappoint that's around 5% and with less or more, so this the second wave got a correction Have 50% up to the first wave.

So we are in a normally range and we are still in this strategy rooms. And the third rule is that the third wave must be any time to strongest wave. Okay, so as you can see this is the third, third wave, and this one must be the powerful, more powerful than the first one. And actually it's looked very good but we are live so, there's nothing more yet we will see this tomorrow or I will see this tomorrow and you will see this. If you look the video in the practicing module, what happens then because I will make the next video in a few days that you can see more because every candle See one day. So we need a bit of time difference to see more what happens.

And so we could see, like also price range over a year. So that's again 10%. And what is this, this is actually around nine dot 1%. So we need a bit more power that the third rule is correct. And we will see this in the next days. The fourth rule is that the fourth wave shouldn't be not correct more than 38%.

Okay, so we need to fix our fourth point a little bit, because it shouldn't be more than 38% and that we will also see it The next days and what we can now do announce the point where we compare all together is we're using the Fibonacci retracements again. So we go make in this one here is the Fibonacci retracement and if you know put it on the lowest point up to the highest actually point what you see what you can exactly see over here is that we have two quite really exactly retracements because the first one is the up to 60% retracement to zero dot 618. So hope you can see this. They're 061 8% And the chart is quite exactly on the point a little bit under but that is really okay because I don't know where I exactly exactly fixing that it should be there and it should be here.

So so the zero dot 618 what means that would be the 60% retracement is quite exactly on this point. And there you can see that the Fibonacci rules working again very great. And then the next one, what you can see and what we don't happen yet is the fourth wave. The fourth wave is over here. And you can also see that we have exactly on this point right Trace meant line. So if the course would go back to this line here to the zero dot 236 line retracement, we will be access on the Fibonacci we will be exactly on the Fibonacci retracement series.

And also we are in we are also in the strategy of the wave theory. So we have three matches the basic trendline, the retracements and the waves, and now we can look practically into the future. And yeah, see what could happen. And it's a really interesting thing on the Elliot wave theory. And yeah, that's one of the best theories in my opinion, which works really often. Really often.

Let's have a look Let's have a look. So I won't touch this again, I'm just making sure I've just made an screenshot here. So, for now, you can also try to find out these waves for your own, you can look for the NASDAQ and look for the Dow Jones, you will find also these lessons done in the practicing module. And you will also find now and in the course list you will find the ruling and the rule list for the end of the wave theory because it's quite complicated I know and you should always following the rules to complete these wave theory. So, quick look for our earlier correction wave which should be light. Like this is an easier ABC correct correction wave, but there are better ones because we have here three ones in here, three ones.

So double and double correction wave and this is a long term one so you will see more of this Elliott Wave theories and actually what we done here and the practicing module and this was also the last video for our basic trading techniques and basic chart analyzes and the rest is down in the practicing module. After this module we will start in short excuse to risk management because risk management is really really important for you for every trader because you need to secure your positions and that easily means secure your money. So we have a short lesson about risk management and after that, the practicing module will start