Best Technical indicators Eliot wave theory ( Secret trick to use it by using 1-2-3 rule) – NEW.

Best Technical indicators Eliot wave theory ( Secret trick to use it by using 1-2-3 rule) – NEW.

​The Elliott Wave Theory is a technical analysis tool that posits financial markets move in repetitive cycles or waves, influenced by collective investor psychology. These waves are categorized into impulse waves and corrective waves.​

Impulse Waves: These consist of five sub-waves moving in the direction of the main trend:

1. Wave 1: Initiation of the trend.​

2. Wave 2: Minor correction against the trend.​

3. Wave 3: Typically the strongest and longest wave, continuing the trend.​

4. Wave 4: Another correction, usually less severe than Wave 2.​

5. Wave 5: Final push in the trend’s direction before a larger reversal.​

Corrective Waves: These are composed of three sub-waves (A, B, and C) that move against the main trend.​

Key Rules of Elliott Wave Theory:

1. Wave 2 cannot retrace more than 100% of Wave 1.

2. Wave 3 cannot be the shortest among Waves 1, 3, and 5. ​

3. Wave 4 must not overlap with the price territory of Wave 1, except in diagonal patterns. ​

4. Applying the 1-2-3 Rule:

The 1-2-3 Rule is a practical application within the Elliott Wave framework to identify potential trade setups:​

Identify Wave 1: Spot the initial move indicating a new trend.​

1. Observe Wave 2: Wait for the corrective phase that doesn’t exceed the start of Wave 1.

2. Enter on Wave 3: Initiate a trade in the direction of Wave 3, which is often the most powerful wave.​

3. Secret Trick: Combining Fibonacci retracement levels with the 1-2-3 Rule can enhance accuracy. Typically, Wave 2 retraces about 61.8% of Wave 1. Monitoring this retracement level can provide a strategic entry point for Wave 3. ​

Caution: While the Elliott Wave Theory offers valuable insights, it’s essential to use it alongside other technical indicators and risk management strategies to account for its subjective nature and the complexities of market behavior.

​Best Technical indicators Eliot wave theory ( Secret trick to use it by using 1-2-3 rule) – NEW.

Elliott Wave From textbook to trading floor

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Here’s a practical and focused breakdown of the best technical indicators to pair with Elliott Wave Theory, plus the “1-2-3 Rule” secret trick that can help you apply it more effectively, especially for new traders or those wanting a structured system.

What is Elliott Wave Theory (Quick Recap)?

Elliott Wave Theory states that market prices move in predictable cycles of:

• 5-wave impulse patterns (1-2-3-4-5) in the direction of trend

• 3-wave correction patterns (A-B-C) against the trend

The “1-2-3 Rule” — Elliott Wave Secret Trick

What Is It?

The 1-2-3 Rule helps you confirm and enter trades during Wave 3 — the strongest and most profitable wave.

How It Works (Simple Version):

1. Wave 1: Market reverses slightly — initial move from bottom/top.

2. Wave 2: Price retraces a part of Wave 1 (shallow correction).

3. Wave 3: Breakout move — enter after price breaks the top of Wave 1.

The Trick:

After identifying Waves 1 and 2, draw a line at the top of Wave 1. When price breaks this line → enter trade in direction of trend (Wave 3).

This keeps your risk low and reward high.

Best Technical Indicators to Use with Elliott Waves

Here’s how to enhance wave analysis and the 1-2-3 rule:

1. Fibonacci Retracement

• Use: Identify where Wave 2 and Wave 4 might retrace.

• Key Levels: 38.2%, 50%, 61.8%

• Combine with 1-2-3 rule: If Wave 2 ends near 50% or 61.8%, it’s a strong setup for Wave 3.

2. RSI (Relative Strength Index)

• Use: Detect divergence and overbought/oversold conditions

• Secret tip:

  • During Wave 2 → RSI may show hidden bullish divergence

  • During Wave 3 → RSI breaks above 60-70 → confirms trend

3. MACD (Moving Average Convergence Divergence)

• Use: Confirm momentum and trend shift

• Entry signal: When MACD line crosses signal line near start of Wave 3

4. Fractals or Zigzag Indicator

• Use: Helps label minor swings (good for identifying 1-2-3 setup)

• Platforms like TradingView offer zigzag indicators that auto-highlight swings.

5. Volume Indicator

• Use: Confirm Wave 3 (should show strong increase in volume)

• Low volume in Wave 2 + spike in Wave 3 = classic confirmation

Elliott Wave + 1-2-3 Entry Example (Buy Trade)

1. Wave 1 forms – You spot a reversal from bottom

2. Wave 2 retraces – Hits 50–61.8% Fibonacci

3. RSI remains above 40 (hidden bullish divergence)

4. MACD crossover happens near end of Wave 2

5. Price breaks top of Wave 1 → Entry point (Start of Wave 3)

6. Target: 1.618 or 2.618 Fib extension from Wave 1

Tools/Platforms to Use

• TradingView: Use ZigZag + Fib retracement + RSI + MACD

• MetaTrader 4/5: Also good for drawing waves + custom indicators

• Elliott Wave Auto Tools: Look for paid indicators if you want automated labeling

Summary: Elliott Wave “1-2-3 Rule” Strategy

Want More?

I can give:

• A PDF cheat sheet of this strategy

• TradingView indicator list and template

• Step-by-step example chart

Just ask — I can tailor it to crypto, forex, or stocks depending on your interest.