THE ELLIOTT WAVE OSCILLATOR

The Elliott Oscillator, or 5/34 Oscillator, is a 34 period simple moi!" aera"e o# prices s$%tracted
#rom a 5 period simple moi!" aera"e o# prices displa&ed as a histo"ram a%oe a!d %elo' a (ero
li!e) *o$ ca! d$plicate the Elliott Wae Oscillator o! charti!" pro"rams 'ith a +AC, #eat$re) It
ca! %e applied to a!& time #rame -i!trada&, dail&, etc). a!d 'or/s e0$all& as 'ell i! eer& time
#rame proided that the correct !$m%er o# %ars are displa&ed i! the chart) The chart %elo' is a
"ood e1ample o# ho' e##ectie this tech!i0$e ca! %e i! co$!ti!" +ome!t$m Waes)
Whether or !ot +ome!t$m Waes co$ld %e co!sidered as tr$e Elliott Waes is !ot importa!t) We
2$st accept that the& are !ot a!d $se them #or 'hat the& are er& "ood at doi!", ide!ti#&i!" the
c$rre!t state a!d the pro%a%le termi!atio! poi!t o# a s'i!") The most importa!t si!"le co!cept
a%o$t the Elliott Oscillator is that the hi"hest/lo'est poi!t o# the Oscillator is co!!ected to the
%$llish/%earish Wae 3 o# the s'i!") Related co!cepts are that Wae 4 crosses the (ero li!e i! the
opposite directio! o# the tre!d) Wae 5 o#te! ma/es a !e' hi"h or lo' price #or the s'i!" %$t
al'a&s dier"es #rom the Oscillator) I# the s$spected Wae 5 ma/es a !e' e1treme price
sim$lta!eo$sl& 'ith a !e' Oscillator e1treme the! it is !ot a Wae 5) This happe!s #airl& o#te!
'ith i!trada& charts) What &o$3re seei!" i! that sit$atio! is a! e1te!ded Third Wae 'hich carries
the implicatio! o# a si"!i#ica!t price moe i! the directio! o# the tre!d &et to come)
O4ERATIVE TI+E 5RA+E CHARTS
The Elliott Oscillator is most e##ectie 'he! the chart has the 6correct6 !$m%er o# %ars) 5rom 788
to 758 %ars is the correct !$m%er o# %ars to $se 'ith the oscillator) ,r) 9ill Williams s$""ests 788:
748) Tom ;oseph implies that 758 is ri"ht) We li/e to $se a%o$t 7<8 %ars, 'hich is com#orta%l& i!
the middle o# that ra!"e, a!d 'hich has co!siste!tl& prod$ced relia%le res$lts)
There is !othi!" ma"ic a%o$t 7<8 da&s, 7<8 ho$rs or 7<8 mi!$tes) Altho$"h a! Operatie Time
5rame Chart co$ld coi!cide!tall& %e a!& o# these time periods, co!str$cti!" this chart has !othi!"
to do 'ith #i1ed time periods) 4$t simpl&, a! Operatie Time 5rame Chart is a %ar chart that starts
at a si"!i#ica!t piot poi!t a!d displa&s 7<8 %ars o# the s'i!" that started at that partic$lar piot
poi!t) I# a!al&(i!" small time #rames, li/e o! o$r Ho$rl& Charts, a! Operatie Time 5rame chart
'ill displa& a%o$t 7<8 %ars o# a!&'here #rom 75 to <48 mi!$tes o# i!trada& data) The time period
o# the %ars i! the chart is arra!"ed to al'a&s sho' the s'i!" as a! ee!t co!sisti!" o# a%o$t 7<8
%ars) The sample S4= chart comprises >5 mi!$te %ars) This more rece!t E$rodollar chart
comprises t'o da& %ars) The completed #ie 'ae se0$e!ce 'o$ld %e i!alidated %& a!& moe
%elo' the s$spected 5th 'ae 7)7? lo')
WHAT CA@ *OA ,O WITH A@ O4ERATIVE TI+E 5RA+E CHARTB
Closel& determi!e the pro%a%le time period o# the e!d o# a correctio!)
Aoid losses %& reersi!" too earl& o! a s'i!" that loo/s complete)
Closel& determi!e the li/el& termi!atio! o# a s'i!" o# a!& de"ree)
,ecide i! o!e seco!d 'hether &o$ sho$ld %e lo!" or short)
@ot %ad crede!tials #or a simple tool)
These "$ideli!es ca! %e $sed 'ith classic a!d moder! Elliott Wae a!al&sis a!d also 'ith the
Elliott Oscillator i! a %ar chart o# #rom 788 : 758 %ars #rom 4oi!t Cero)
WAVE CO@,ITIO@S
A coi!cide!ce o# 4atter!, 4rice a!d Time has come
I+4LICATIO@S
The s$spected hi"h or lo' tic/ at a ma2or
5I9O@ACCI
The most commo! 5i%o!acci
4OI@T
CERO
to"ether to mar/ a ma2or piot that 'e hae ide!ti#ied
as the 5th o# a 5th 'ae) The Elliott Wae patter! ma&
!ot al'a&s %e the o!e that 'e 'ere e1pecti!") Whe! a
#ractal occ$rs it mea!s that a 'ae has e!ded, read& or
!ot)
piot poi!t is the ideal e!tr& poi!t) This
e!tr& has the least capital ris/ %eca$se it
is closest to the i!itial stop loss poi!t :
the piot) The trade o## is that there 'ill
%e a hi"her perce!ta"e o# losses) The
mar/et does !ot al'a&s reerse 'here 'e
'a!t it toD The piot poi!t is 4oi!t Cero)
relatio!ships %et'ee! Elliott
'aes o# the same de"ree)
W)7
Will #ollo' either a three 'ae A:9:C or a #ie 'ae
imp$lse patter!) W)7 that #ollo's a! A:9:C is a!
imp$lse 'ae) W)7 that #ollo's a #ie 'ae patter! is
W)A o# a! A:9:C patter!)
+oder! Elliott Wae a!al&sis allo's #or #ie 'ae
tria!"le patter!s i! the W)7 positio! o# lesser de"ree
'aes) That mea!s that W)4E7 ca! oerlap W)7E7
'itho$t i!alidati!" the patter! as a! imp$lse 'ae)
The i!ter!al str$ct$re is 3:3:3:3:3)
W)7 tria!"les are !eer allo'ed as lesser de"ree 'aes
'ithi! a lar"er de"ree W)3)
@e' W)7 o# the same de"ree sho$ld
oer%ala!ce the immediatel& prior
correctie patter! i! price ra!"e %$t !ot
!ecessaril& i! time)
4RICE
Ase i!ter!al s'i!"s o# lesser
de"ree to pro2ect termi!atio!
o# W)7
TI+E
Imp$lse W)7 $s$all&
oer%ala!ces i! time the
prior co$!ter tre!d s'i!")
W)<
Ci":Ca" -A9C. most commo!)
Tria!"les least li/el& i! W)< positio! a!d most li/el& i!
W)4)
W)< most li/el& to %e more tha! 58F i!
time o# W)7) Aoid premat$re e!tr&)
4atie!ce re0$ired)
Wait #or C 'ae completio!) The #irst
co$!ters'i!" is li/el& 2$st the A le" o# a!
A9C patter!)
+$st !ot pe!etrate 4oi!t Cero or
s$spected cha!"e i! tre!d #rom 4oi!t
Cero is pro%a%l& 'ro!")
4RICE
G 58F H ?>)IF W)7
TI+E
G 58F W)7 mi!im$m
G I<F H 7I<F o# W)7 most
li/el&
W)3
As$all& the lo!"est a!d stro!"est tre!di!" 'ae o# the
se0$e!ce)
W)3 ca!!ot %e the shortest 'ae o# a #ie 'ae
se0$e!ce) W)3 does !ot hae to %e lo!"est 'ae %$t it
ca! !eer %e the shortest) This is o!e o# the er& #e'
R$les o# Elliott Wae a!al&sis)
W)3 al'a&s s&!chro!i(es 'ith a! Oscillator e1treme)
The Oscillator e1treme $s$all& occ$rs %e#ore the price
e1treme)
W)3 co!#irmed 'he! the price e1treme o#
W)7 is e1ceeded) 4rice sho$ld !ot come
%ac/ a!d trade %e&o!d the %e"i!!i!" o#
W)<)
I# s$spected W)3 completes #ie 'aes o#
lesser de"ree a!d is less tha! 788F o#
W)7 co!sider that the s$spected W)3 is
W)C o# a correctie patter! a!d !ot a!
imp$lse 'ae)
4RICE
W)3 7I<F : <I<F o# W)7
W)3 7I<F : <I<F o# W)<
TI+E
W)3 almost al'a&s lo!"er i!
time tha! W)7
W)3 o#te! e0$al i! time to
complete W)8 thro$"h W)<
O!ce W)3 e1ceeds 788F o# W)7 loo/ #or
price to reach a!d pro%a%l& e1ceed 7I<F
o# W)7
Loo/ #or termi!atio! co!ditio!s 'he!
W)3 e1ceeds <I<F e1pa!sio! o# W)7 or
4<4F retraceme!t o# W)<
se0$e!ce)
W)4
I# W)< 'as a! A9C the! W)4 'ill pro%a%l& %e comple1
a!d ica ersa) This is the pri!ciple o# alter!atio!)
Loo/ #or mi!im$m o# three #ractals i! lo'er time
#rame a!d mi!im$m price relatio!ship o# I<F to W)<
W)4 sho$ld !ot pe!etrate W)7) A W)4 close i!to W)7
i!alidates the W)5 set$p) This is a R$le)
4rice e1treme o#te! occ$rs %e#ore the
termi!atio! o# the W)4 patter!) I!
comple1 'aes Time #actors sho$ld %e
the primar& co!sideratio!)
I# Wae 4 has e1ceed G58F o# Wae 3,
the possi%ilit& o# a 5th 'ae #ail$re is
i!creased)
The Oscillator 'ill cross the (ero li!e
t'o times d$ri!" W)4) 5irst a"ai!st the
directio! o# W)3 a!d the! i! the directio!
o# W)3 to si"!al that W)4 has #$l#illed
mi!im$m re0$ireme!ts #or completio!)
4RICE
H 58F o# W)3
W)4 3>F W)3 commo!
W)4EW)3 H W)<EW7 o!
perce!ta"e %asis
W)4 I<F 788F 7I<F W)<
W)4 G <3)IF H 58F W)8 :
W)3
TI+E
W)4 most o#te! related to
W)3 or W)8 : W)3
O#te! lo!"er i! time tha!
W)3 / W)8 : W)3
W)4 73>F : 7I<F o#
4arallel 4ro2ectio! o# e!ds o#
W)7 : W)3 meas$red #rom
%e"i!!i!" o# W)<
W)5
Loo/ #or termi!atio! 'he! W)5 has completed at least
#ie #ractals i! lo'er time #rame a!d is i! a
coi!cide!ce o# 4rice a!d Time)
W)5 has made !e' price e1treme a!d price a!d the
Oscillator are dier"ed)
Whe! the e1treme o# Wae 3 is e1ceeded
the ma1im$m stop loss sho$ld %e raised
to Wae 4)
Whe! #o$r #ractals are i! place #or Wae
5 traili!" stops sho$ld %e moed er&
close to the mar/et)
I# Wae 4 has e1ceed G58F o# Wae 3,
the possi%ilit& o# a 5th 'ae #ail$re is
i!creased)
4RICE
W)5 J I<F 788F 7I<F W)7
I# W)3 e1te!ded W)5J I<F
or 3>F o# W) 8:3
W)5J7<?F, 7I<F, <88F,
<I<F W)4
TI+E
W)5 G W)4 i# W)4 is a simple
A9C
W)5 H W)4 i# W)4 is comple1
W)A
As$all& a #ie 'ae patter! %$t ca! %e three) Ca$tio! re0$ired a#ter #irst three 'aes
complete) +a& %e o!l& 3 o# 5)
4RICE
9et'ee! 3>F : 58F o# prior
See W)7 descriptio! #or the imp$lsie tria!"le patter!
that ca! also occ$r as a W)A
Ass$me the #irst #ie 'ae str$ct$re is
the W)A o# a! A:9:C patter!)
W)5
TI+E
@/A
W)9
As$all& a three 'ae patter!) Wait #or at least a 58F retraceme!t o#
related W)A %e#ore e!teri!" a trade
4RICE
G 58F H ?>)IF o# W)A
TI+E
G 58F H 788F o# W)A time
W)C
Classicall& W)C is a #ie 'ae patter!) I# W)C) e1ceed 7I<F o# W)A the la%eli!"
is pro%a%l& 'ro!") The c$rre!t patter! is
pro%a%l& imp$lsie)
4RICE
W)C) $s$all& I<F 788F
7I<F o# W)A
W)C 7I<F <88F <I<F o#
W)9
W)C) rarel& G <I<F W)9
TI+E
Ase Time "$ideli!es #or
complete A:9:C correctie
patter! i! W)< or W)4)