The Y-wave is the third component of the WXY complex corrective wave. It is a unique minor wave because it is easy to forecast it after the X-wave.
One that is applying the Elliott wave principle ought to deduct other sub-principles from the Elliott wave theory in view to interpret the price structures more accurately. Let's find out more about the Y-wave principle.
What Is The Y-wave Principle?
Probably you have never heard about the Y-wave principle, and you are wondering what's that dude or mate. Tell me more, tell me more please.
Alright, I get you. In general, a principle is a ruling truth. One can say that the Elliott wave principle is the ruling truth about the Ralph Elliott wave structures.
Therefore, the Y-wave principle is the truth that rules that specific minor corrective wave of the WXY. With that truth, one can interpret more easily even the most complex Y-wave.
Have I heard you asking why?
Why? Why? Well that is an excellent question. The truth is the light in the darkness. The truth will set you free from ignorance and complex wave structures. With that, one can remain calm when everything looks chaotic around oneself.
Feel free to quote me everywhere. I say: "when the Elliott wave structures do not make sense (not helpful), one must rely on the wave principle (truth) that governs them."
So what I am saying is this. Rely more on the Y-wave principle instead of the structure itself and you will be alright.
Remember that the Elliott wave rules, principles or truths will set an Elliott wave trader or analyst free from confusion and wave complexity.
Principle Versus Principles
For an expert Elliott wave analyst, principle equals principles. Did you ask why? It is call fractals (predictive fractal patterns). A truth or principle can be broken down into millions of mini truths. Each mini truth again can be subdivided into other mini-mini truths and so on.
The difference between an expert Elliott wave analyst and commoner wave practitioner is that the expert has managed to break the Elliott wave principle into mini truthful principles.
Consequently, Y-wave principle is exactly the same thing like Y-wave principles. Y-wave principles derive from the (or an) ultimate Y-wave principle.
Now your eyes are open.
Slowly but surely, you will begin to use the Elliott wave principle in a new way by deducting valid sub-principles to interpret complex wave structures.
Y-wave Principles Or Rules (Truths)
1/ The Y-wave can take the shape and form of any corrective waves. 2/ The Y-wave can be a triangle (abcde). 3/ The Y-wave can be a flat correction. 4/ The The Y-wave can be a zigzag, double or triple zigzag. 5/ The Y-wave can be a mini wxy on its own. 6/ The Y-wave can be any complex wave on its own. 7/ The Y-wave can be followed by a valid motive (new trend) or another X-wave. 8/ The Y-wave can be a messy prolonged consolidation when the price is just oscillating between two key levels. 9/ The monthly or higher times frame WXY or Y-wave is more useful than times frame lower than the monthly chart. 10/ Trading Y-wave or WXY on lower times frame is a bit speculative. One should adopt a speculative mindset in those circumstances. 11/ There could be alternance between the W-wave and Y-wave like the 2nd and fourth wave of a valid motive (according to the Elliott wave rules).
Warning Note that I use the word could instead of is. There could instead of there is.
12/ The Y-wave can be extended. I mean prolonged on the time scale (duration). 13/ The Y-wave is primarily correcting the X-wave though it is also correcting the prior trend or impulse wave that the whole WXY wave is correcting. 14/ One must monitor the volatility during the Y-wave because it is the last segment of the WXY.
Generally, a low volatility is followed by a high volatility and vice versa. 15/ An intelligent investor who identifies the monthly chart Y-wave must check also the financials and market environment. 16/ A financial instrument may be exhibiting the same WXY or Y-wave pattern over and over in many years. Keep your eyes open and do not blink.
For example a stock may often be printing WXY wave as flat correction-Xwave-triangle or zigzag-xwave-triangle or sharp correction-xwave-consolidation. 17/ One can also spot WXY or Y-WAVE on the 15M, 4H, daily and weekly charts. Please check Elliott wave times frames. 18/ It is easy to forecast the Y-wave after a valid X-wave.
Final Thought About Y-wave Principle
Every principle can be subdivided into other principles. With those principles listed above, one can surely deduct other truths. The objective of using the Y-wave principle is to unstuck oneself when the internal waves are too complex to interpret.
Those principles are not scientific rules, but guidelines to interpret, not to translate the WXY wave structure.
The ultimate goal of course is to have a clear understanding of what is brewing beneath the corrective wave, and take position in a timely fashion like an intelligent Elliott wave trader or investor.
Alright, that will do for now. However, it will not be long before I post another wave trading article. Please stay tuned and bookmark this web page. Thank you for visiting 24Elliottwaves website.
I hope this article will help improve your wave structures analysis. If you say yes then feel free to share it. Also say few good words about 24Elliottwaves on various educational forums. I will really appreciate that.
Whatever, you do, enjoy it and keep smiling. I wish you the very best in all. Happy Elliott Wave
This article is written by George Beaulieu Founder Of 24Elliottwaves.com Website