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How to count waves and the Elliott waves

Elliott Wave Confirmations

The Elliott wave principle allows Elliott wave traders to forecast the financial markets.  It is a very useful guide
for those who seek to predict the next price move.   Nevertheless, not all Elliott wave traders know how to use the Elliott wave forecasts.  Truly, the bottom line in trading is how much money one has made.
Therefore, after one has completed an accurate Elliott wave forecast, one must ensure that one gets paid.  And to get paid means that the price confirms the Elliott wave forecast. 

Common Elliott Wave Forecast Mistakes

1/ buy or sell straightaway after the forecast without waiting for a confirmation.
2/ Not Mapping out the chart after the forecast in view to identify high probability trade setups.
3/ Not knowing how to use a top-down trading method in conjunction with the Elliott forecast to improve market timing.
4/ Assuming that the price will confirm every segment of the forecast price structures.
5/ Assuming that the price always confirms a valid Elliott wave forecast.

A valid forecast is a viable expectation, but the price may still print something completely
different.  It does not mean that the forecast was wrong.  It only means that other external unexpected factors win the day.  Yes, one has applied the Elliott wave principle correctly.  One has followed the correct procedure by doing the following:
a/ preliminary waves count
b/ validation of the waves count
c/ going into the minds of other Elliott wave traders in view to take into consideration their waves count without discounting them.
Though, one has at hand a master class Elliott forecast, the price can still move against that forecast.

Quite often, technical traders pay fees for Elliott wave forecast services, but they do not gain anything from those valid forecasts just because the price did something that was unexpected.

It is true that sometimes it is the forecast that is useless, and no one should rely on useless ( one sided) Elliott wave predictions.  However,  a valid Elliott wave forecast needs a confirmation. 

Different Types Of Elliott Wave Forecast Confirmations

1/ Full confirmation

A full confirmation occurs when the price confirms every segment of the forecast
price structures.  For example, one forecasts the motive wave (trending phase) using the internal waves of the first wave and the price confirms every segment of the projected price-action.

2/ Partial Confirmation

This time, the price only confirms few segments of the forecast.  One forecasts
a clean cut ABCDE corrective wave in the fourth wave, but after the C-wave the price begins to speed up above the range without confirming D and E waves. Instead of having ABCDE triangle, one has ABC triangle.  You may argue and say, I have never head about ABC triangle before.  Though one has never heard about it, it can still happen.  So what are you going to do about it?
What are you going to do about that?
Are you going to punish the price?
Please stay calm and just flow with the price.
Do not fight it if the Elliott wave forecast confirmation is partial.

3/ Invalid confirmation

The invalid confirmation occurs when the price starts confirming the forecast then turns around to invalidate it by reversing the initial confirmation.

Suppose one forecast the start of the third.
Next the price begin to rise as one has predicted it.  However as it goes above the high of the first wave, it hits the resistance at 138.2% Fibonacci extensions of the first wave and turns around crashing down at a fast speed to the point of canceling the first wave.  Now, what started as a nice third wave has now turned into a messy reversal.
What are you going to do about it?

Sometimes, one forecasts the 4th wave or a correction on the monthly chart.  The price begins to confirm the pull back.  For fourteen days, the price is just printing what one was expecting.  However on the fifteenth day, it begins to reverse and the monthly bar that was initially bearish becomes a bullish candlestick bar with a long tail.

4/ Zero confirmation
In this instance, the price does not confirm any part of the forecast.  For example, one forecast a corrective phase after the third or fifth wave but the price continues to rise as the bullish motive wave is extended.
Or one forecasts a fully fledged motive wave (bullish trend) but one ends up having X wave. 

What are you going to do about it?
The main factors of a zero Elliott wave forecast confirmations are wave extensions, market sentiments, central bank sudden change of policies or unexpected events or news.
Sometimes, the zero Elliott wave forecast confirmation is due to a poor Elliott wave analysis. 

After all, the Elliott forecast is an expectation, but it must be confirmed.
When and only when it is confirmed that
one has an edge in the financial markets.
By knowing the four different types of Elliott forecast confirmations, one will begin to squeeze the juice out of a valid Elliott wave forecast so to speak.
It is true that over the years, vast amount money has been wasred just because people were forcing the Elliott wave forecast onto the price-action.  It was a silly mistake.  Also, many genuine Elliott wave analysts have been wrongly vilified
just because of that same silly mistakes.
Now the time has come to put an end to the misuse of the Elliott wave forecast
with a clear understanding of the Elliott wave forecast confirmations.

I hope this article has been useful to you.
If that is the case, feel free to share it on
the social websites.

Author:  George Beaulieu
An ordinary trader who delights in opening
the eyes of Elliott wave traders.