The Power of Elliott Waves illustrated

Every few days I am reminded of the power of Elliott Waves. Illustrated below is how I anticipated a down move of at least 20% in an Indian Stock.

You would remember from my Elliott Wave book “Five Waves to Financial Freedom” that when a fifth wave extends, the correction that follows often tests the sub wave 2 with that fifth wave, and quite regularly goes even lower to reach the prior wave 4 low. On 30th December 2018, when I looked at Karur Vysya Bank stock for a client, I saw the portends of a further sell off. Already the stock had come down from its September 2017 high on 136.54 to around Rs 74 by October 2018, a move of over 45%. The recovery back to its then current levels of around Rs88 seemed part of a correction. So I placed an alert of my Thomson Reuters Eikon system to email me when the stock breaks its prior lows of Rs 74, so that I can evaluate how much lower the stock can go. See this email I received today.

Below are a couple of more charts to help you see how I look at the waves!

First, you identify the end of wave 3
Then you figure out where wave 5 could end



6 Comments

  • Prabh Singh

    Hello Ramki,

    Only issue with above Wave counts is that Wave 4 is entering into territory of Wave 1 which is one of the key principle of Elliot wave nicely explained in your books and here it seems that rule getting violated.What are your thoughts for same?

    • Ramki Ramakrishnan

      Prabh, You are right in your observation. One could also say that the so-called wave 5 looks to be in 3 waves. What matters at the end of it all is how we deal with price. But that does not mean we can allow the rules to be flouted when it suits us. This particular case will remain a mystery for me, and will have to be marked as a suspect.

  • Kannan

    Hello Ramki,

    I have small query on counting. Can we count the Sep’10 high as the wave 3 and Jan’13 as Wave 5 and the correction after that till Aug’13 as the ABC correction completing the cycle and the next set of 5 waves starting from Aug’13 to Sep’17.

    Is there any mistake in the way I do this counting.

    • Ramki Ramakrishnan

      Kannan, Wave counts are the means to an end, which is to be profitable. My workshop will go deeper into this aspect

  • Udit

    Sir on trading view.com this chart is different. Plz check it.

    • Ramki Ramakrishnan

      Udit, Thank you but I have no control over the data whether it is from Thomson Reuters or from Trading View of any other website. This free blog exists to help traders learn Elliott Waves! So the concepts are more important. All the best.

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