# Elliott Wave Analysis of IBM

Elliott Wave Analysis of IBM presents a fascinating study of how one could profit from the use of this approach to trading the stock markets. Today I present you three charts that show you how IBM stock moved exactly as an Elliott Wave text book would have described it.

Starting from a significant high seen in IBM, we are able to count the waves easily. Observe that wave 2 did not exceed the top of the first wave. We then got a swift sell off as a third wave. You will also see that the third wave was an extended wave, traveling a distance of 300% of the first wave. Elliott Wave theory suggests that at least one of the three impulse waves in a five-wave sequence would likely extend. ie travel an unusually long distance. My book “Five Waves to Financial Freedom” explains that we often consider a third wave as extended if it travels a distance greater than 161.8% of wave 1. Let us now look at the next chart.

Typically when a third wave extends, the ensuing fourth wave travels only 23.6% of wave 3. However, this is not a rule, and we often do see a 38.2% recovery as happened here. Once the fourth wave was completed, we could have easily anticipated the end-points of the fifth wave as shown below.
This concludes another valuable lesson on how to use Elliott Waves to anticipate market turns. Spend the time to learn the techniques taught in this blog and you will soon trade like a pro. Good luck.

• Geo. R.

Ramki, please give us an updated of your thoughts on the S&P 500 Index. Many thanks.

• Keith D

Ramki, what is the larger degree context of the 5-waves down? Is it the beginning leg of a larger correction or first leg down in a new impulsive decline? Or is it the completion/final leg of an irregular flat? Curious to know your thoughts on the bigger picture context. Thanks, KD

Sir,
I think u have made some changes on wavetimes… Not sure abt that but some kind of changes are done I guess. May be font size , looking more appealing….

Regards,
Ankur

• Ankur, Glad you like it

• sajan

plz sir tell me abut gold

• Sajan, WIth Fiscal Cliff as an event risk, you got to be careful. 1678/80 ios resistance now

• Basem

Hi Ramki,

I am a bit unclear about how your measure wave 3 length using Fib.

I am looking at one of your old examples which is USDCHF, published on 3 of Sep, in that example you measured wave 3 when you started from the end of wave 2 to the end of wave 4 to find out that wave 3 was 161.8%.

In the IBM example, you started from the end of wave 2 to the end of wave 1.

which approach I should use as both are giving different results?

Many Thanks

Basem

• Basem, thanks for your question. I suggest that you get hold of a good book on EWP and read it carefully. It is evident that your basics are a bit unclear. Good luck.

• luca

hello dott. Ram
if poss.
do you have any “idea” about the long-term trend of eur/usd pls

cheers
luca

• Luca, let the fiscal cliff drama be over and we shall look at EUR again

• Hello Sir–

Its Long time No Update abt Gold-Silver From Ur Side !

Hope to See Soon Ur Precious View on Commodity Market !

• Crystal Clear

Merry Christmas, Sir.
Care to share how do you see AAPL and GOOG?