Trend Analysis
The MWC and LWC are both subwaves of the HWC and are regarded as
wave cycles of lower degrees. It is critical that a trader be able to visualize price
cycles on the chart. Without knowing which wave cycle is being traded, any of the
following scenarios may result:■ (^) Inability to select consistent breakout levels
■ (^) Inability to select effective stoploss levels
■ (^) Inability to apply effective stopsizing
■ (^) Inability to distinguish between trend and consolidation mode
■ (^) Inability to determine the direction of the predominant trend
Elliott waves are studied in terms of wave cycles and wave degrees. Figure 5.6
depicts an Elliott wave count in terms of wave cycles and wave degrees. Refer to
Chapter 18 for a detailed discussion of Elliott waves and the 5‐3 fractal trend
structure.
figure 5.5 Trend Action in Terms of Wave Cycles and Degrees.
figure 5.6 Elliott Wave in Terms of Wave Cycles and Degrees.