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Fifth Elliott Wave Phenomenon

I have been keeping my eyes wide open when major indices exhibit a valid fifth wave on the monthly chart.  And in this article, I will share with you what phenomenon has been worrying me when major indices are in the 5th Elliott wave.  Let's get started.

Before we continue, promise me that you will not forget that 5th Elliott wave phenomenon.  Let's get into it.

Time Frame For 5th Elliott Wave Phenomenon

The time frame for the 5th Elliott wave phenomenon is the monthly chart.  One should not use the lower times frame for that purpose.  Though, the fifth wave phenomenon is noted more on the monthly chart, it is also true for both quarterly and yearly charts.  Personally, I will be using the monthly chart.

How Did I Spot 5th Elliott Wave Phenomenon

Have you ever tried to sell in vain a financial instrument just because it is in the fifth wave?  Probably, you did, and you are not alone because as a beginner, I have done it few times.  On many occasions, the price will not crack a bit or the fifth wave will be extended or the decline will be delayed.  Right?

An advanced Elliott wave trader that is combining the wave trading with the different times frame strategy will sell as soon as there is a valid trading signal on the signal time frame.   Many times, things will work smoothly and everyone will get paid after a nice market timing.

Sometimes, even after the accurate market timing, the price will bounce back up rapidly after declining one or two days.  Well, you have done your bit.  Take a tiny profit or cut losses and back off.  So that is what usually happens when one is selling in a bullish fifth wave. 

However, after keeping my eyes wide open without blinking for many months, I noticed a fifth wave phenomenon on the monthly chart.  That phenomenon has marked the most successful fifth wave sell signals. 

What I have found was that the best sell signal after the 5th bullish wave derived from bad economic news that create bearish market sentiment. 

On the other hand, the best buy signals after a bearish 5th wave are dramatised by acute bullish economic news that engendered a nice bullish financial market atmosphere.

So, those are the two 5th wave phenomena.
I have also noticed that it is not only the economic news, but any high impact external news that caused governments or central banks to intervene in the financial markets.

Please understand that no one wants any bearish news or bad news that negate the bullish market sentiment.  However, those things do happen, and it is unfortunate in many cases. 

Sometimes, it is just a bad earnings news, and no one gets hurt.  The worst high impact news are those that have nothing to do with the financial markets.  What I call high impact external news that impact market players whether they like it or not.

The most recent one is the very bad coronavirus.  That is an external high impact news that has nothing to do with the financial markets.  However, it caused both governments and central banks to intervene in the financial markets.  That very bad coronavirus has created a bearish market sentiment that pushed major stock indices deep to the south at a faster speed.  

Watch out for news relating to the sectors, market leaders, earnings news,  or any high impact economic or external news that perturb the market sentiment for good or bad. 

Fifth Elliott Wave Phenomenon In A Nutshell

Today, the market is news driven 100%.  In a nutshell, the fifth wave phenomenon is about the best sell or buy signals that derived from a high impact news when a financial instrument is still in the fifth wave.  

Though everything is set, those news act as a catalyst that produces a nice profit after a clean-cut sell or buy signal.  One may say that those unpredictable news either economic or external smooth the trading signals.  It is a phenomenon that is common during the 5th wave.

Note that wave traders that rush to sell in the fifth are often squeezed out their positions because of the 5th wave extensions, crazy late comers or contrarian market players who love to kick out short sellers.  

There are also the activities of the insiders who are defending their company's shares especially at the end of a bullish trend.  The intensity of the fifth Elliott wave phenomenon is high especially if one is dealing with the ending diagonal.  

Usually, one will see the first reaction after the news then one will patiently wait for a clean trading signal on the edge where the risk is very low.  Use a top-down trading method after the news.

My Personal Fifth Elliott Wave Phenomenon

One thing I have noticed that made me fear God is that anytime major stock indices especially Dow Jones and SP 500 are in the fifth wave, one can bet that a kind of negative news directly or indirectly relating to the financial markets is around the corner. 

Please do not quote me on that because this is just my own observation.
Do not ask me why either because no one knows. 

All we know is that the fifth bullish wave attracts markets corrections that are often loaded with unpleasant news for naive eternal bullish financial markets investors.  Even if the correction is delayed, it is just a matter of time before the fifth Elliott wave phenomenon is unravelled. 

Note that, I am mainly talking about the monthly chart fifth Elliott wave or higher.

The phenomenon is pronounced, I mean globally when those two stock indices are in the 5th wave.  Nonetheless, it is also proportionally true in the case of individual financial instruments.  The same is true for EURUSD, GBPUSD or USDJPY currency pairs.  No joke my friends, pay attention to the monthly fifth wave.

I can tell you more about the fifth Elliott wave phenomenon, but may be you are not ready for it yet. Are you?

One can compile a list of financial instruments that are ripe in the fifth wave, and wait for a catalyst news that will cause the 5th Elliott wave phenomenon.  

Thank you for reading and visiting

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Well, that will do for now.  Please stay tuned because soon I will be back with another wave trading article.

I wish you the very best.

Happy Trading To All.

This article is written by George Beaulieu

Founder Of Website

This was about  Fifth Elliott Wave Phenomenon.