Combination - A combination correction is made of any two of the prior waves
connected by an X wave. Rather difficult pattern to recognize in real time.
I try to avoid this pattern. It is usually quite difficult to recognize in real time.
Elliott wave theory rules:
1. Wave 2 cannot exceed the beginning of wave 1.
2. Wave 3 can never be the shortest out of waves 1, 3, and 5 and is usually the
longest.
3. Wave 4 cannot overlap the range of Wave-1. Although this is an Elliott wave
rule, I found several instances where wave 4 penetrates the range of wave 1 by a
little bit especially in intraday charts. Use your judgment if you see a slight
violation of this rule.
For our purposes, waves 5 and C are the most important waves to recognize. The
reason for this is that usually these waves signal the end of the current trend.
Remember that after every trend comes a correction and after every correction
comes a trend. By recognizing wave 5 and wave C and by being able to project
their end, the trader can successfully project high probability turns in the market.
Remember - a major part of our analysis is based on Elliott Wave theory but our
entry method is mechanical and objective.
Examples of Elliott Wave pattern on different time frames:
The following charts are real charts of the Dow Jones Industrial Average. Please
notice that each chart represents a different ‘time frame’, cycle.
Chart number 1 is a cycle that lasted for about 3 minutes; chart number 2 lasted
for about 10 days; chart number 3 lasted for about 24 days; chart number 4 lasted
for about 9 months; chart number 5 lasted for about 10 years; chart number 6
lasted for about 70 years.
Our basic pattern can be seen on all of them.
