🌟 Capital Market Chronicles – Episode 265: TECHNICAL ANALYSIS – ELLIOTT WAVE THEORY (Part V)
“Powerful tool. Dangerous if misunderstood.” ⚠️📊
This is not a shortcut to trading success. It’s a framework, not a forecast.
🔹 How It Helps Traders
When applied thoughtfully, Elliott Wave Theory can:
✔ Identify the dominant trend instead of reacting to noise
✔ Anticipate potential reversal zones before emotions peak
✔ Improve entry and exit timing using wave structure
✔ Align trader psychology with market psychology
In essence, it helps traders ask better questions — Where are we in the cycle? rather than What will happen next?
🔹 Common Pitfalls (Very Common 😅)
Most frustrations with Elliott Waves come from misuse, not the theory itself.
❌ Miscounting or constantly changing wave counts
❌ Forcing patterns where the market offers none
❌ Ignoring confirmation from volume, RSI, MACD, or trendlines
❌ Treating Elliott Waves like a crystal ball
📌 Golden Rule:
Elliott Waves work best when combined with other indicators and strict risk management.
🔹 Advanced Concepts (Use with Care)
Once the basics are mastered, traders may encounter advanced patterns such as:
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Extended and truncated waves
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Diagonal triangles
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Wolfe Waves
These patterns appear less frequently but can offer powerful clues when correctly identified. However, they require experience — and restraint.
🔹 The Psychology Behind the Waves
Every wave is a mirror of human emotion:
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Early hope
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Growing confidence
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Peak euphoria
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Doubt
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Fear
Markets don’t repeat because charts repeat.
They repeat because people do.
🔚 Final Thoughts
Elliott Wave Theory is not about perfection.
It’s about context, probability, and discipline.
Used wisely, it becomes a compass 🧭
Used blindly, it becomes confusion.
And like every great market tool —
practice turns complexity into clarity. 📊
⚠️ Disclaimer: This Blog is for general guidance only and does not replace personalised financial advice.
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