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Basics of Elliott Waves — Transcript

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0:02all right everybody this is uh the
0:05session on the AL waves um we did talk
0:08about it in the morning uh the recording
0:10had a problem with the voice so I'm just
0:12recording this once more again uh just
0:15all by myself here I'm going to talk
0:17about the key things uh that we talked
0:20in the morning so that you can refer
0:21back with the education material that we
0:24have in the channels and uh we can talk
0:27through them when we are working on our
0:30charts on the weekly basis and on
0:32everyday basis when we are talking on
0:34the trading floow right
0:36so getting started the way uh we covered
0:39today was to go over the basics of Eliot
0:42waves the different um uh categories of
0:45waves the impulse and the correction and
0:48the different types of Correction and
0:49look at some live examples and uh apply
0:52them to some of those charts uh that uh
0:55you know we trade on a daily basis right
0:57so starting with the basic the two types
1:01of waves that we have in aliot waves is
1:04basically an Impulse or motive wave and
1:07a corrective wave a motive wave is
1:09called a motive wave
1:11because it's supposed to move the D move
1:14the stock and the stock price in a
1:17direction it's a directional move the
1:19stock moves from a price X to 5x or 6X
1:24over the period of time whereas the
1:26corrective pattern is
1:28retracing some of that move by a smaller
1:32percentage not completely but by a
1:34smaller percentage right
1:37so impulse wave is there's just one kind
1:40of impulse waves there are different uh
1:42variations on what can happen in Wave 1
1:45and five but impulse is just impulse
1:47wave whereas in the corrective waves
1:49there are multiple patterns and we'll go
1:51over that patterns
1:53today right so to begin with let's start
1:56with impulse
1:58waves or motive w so the impulse wave is
2:01a five wve structure where the wave one
2:04is formed when there's a you know new
2:07hype or new technology or a new news
2:10about um a stock which is kind of
2:12gaining attention it could be a new IPO
2:14launch and uh the stock is just kicking
2:17off because of the hype that it has
2:18right so creates a wave one which is
2:21like the primary wave up here and then
2:24the goes down like hype Dives down what
2:28happens the stock those Dives to a
2:31certain extent but what it doesn't do is
2:33break the bottom from where it started
2:35so it'll stop somewhere in the golden
2:37Zone ratio and we'll talk about those
2:38Fibonacci retracements in a bit um stock
2:42Dives you know different uh institutions
2:46major buyers big boys they are all
2:48accommodating the stocks while everybody
2:50else is selling and when the when the
2:53price kind of bottoms out in a golden
2:55zone or or um uh in the Fibonacci TR
3:00that we're going to talk about the next
3:02move starts again it's not very
3:04immediate that it starts takes time to
3:07accom accumulate that um Stocks by the
3:10big buyers and finally uh you know when
3:13the company uh is actually meeting
3:16expectations and uh we see Revenue
3:19starts to grow or the hype is now making
3:22more sense it's coming to reality we see
3:25that okay in future the stock is going
3:27to do well and uh that's where
3:30now the price is being being mocked up
3:32right more and more buyers are coming
3:33and an Institutional
3:35buyers kind of you know start buying in
3:38more shares and marking up the price and
3:40that leads to this whole wave three up
3:43here right followed by there is again a
3:45stagnation in price which is another uh
3:48balance formation which happens uh
3:51because some of the investors wants to
3:53get out some of them are looking for a
3:54lower prices so all those Market buas
3:58goes away and there is a pause in the
4:00price and they're waiting for company to
4:02kind of keep delivering put more quarter
4:05on quarter revenues and all that good
4:07stuff before they can kick in a next
4:09cycle right so we have certain dip in a
4:11formation which is not really bringing
4:14it price all the way down but it's kind
4:17of just hanging it up here and we'll
4:19again we'll talk about the F retracement
4:21levels for these and once that
4:24accommodation is is done the price marks
4:28is marked up again and this is the last
4:30wave called the fifth wave of
4:33the motive wave where you know most of
4:36the institutional investors start
4:38exiting they start emptying their
4:39inventory because they know that okay
4:42the the the company has delivered uh
4:45they wait want to wait for you know uh
4:49the next few months or years to
4:51understand is company going to keep
4:53going up is this we going to extend or
4:55is this going to be just it I mean all
4:57whatever uh market value the stock would
5:00have gone to it's gone to now it's time
5:02to get out right so this is where the F
5:04wave five ends now once the five waves
5:08end and Company doesn't bring up any new
5:11value to the
5:13investor that is where we see the price
5:16starts to drop could be initial first
5:19fast drop we we could see a bounce but
5:23then again I mean there is nothing new
5:24coming from the company and uh there is
5:26nothing new being uh marketed or we
5:30don't see an um any upsell sort of um
5:33opportunities in in in the company and
5:36that's where everybody starts to exit
5:38and we start looking at you know deeper
5:41moves in that one and that's called a
5:43corrective move to the first one right
5:44so companies back to wherever their Book
5:46value was or you know the Innovation
5:50basically died down and they're just
5:52another company on the Block right so
5:55that's where we see uh some of that
5:57pullback coming in uh um uh in that
6:01stock now it can go all the way down and
6:04do something else but if the company is
6:06strong they are like continuously
6:08building up a pipeline they are
6:11innovating they are under the radar
6:13right they are doing something right
6:15this this this particular correction can
6:18take uh a lot of time where you know
6:21every other person is just exiting
6:23because it keeps going down and now you
6:25know if the company's Basics and ground
6:28uh you know fundamentals are pretty
6:29strong you know uh all the institutional
6:32investors are just looking to get in and
6:34uh get in at the lower prices the prices
6:36that they bought before because they
6:38like that
6:39prices right that's where the next wave
6:41starts again and it becomes a larger
6:43three on a bigger cycle because the
6:45first one that you had was wave one now
6:48does this happen to all the stocks no
6:51right the first one could be just the
6:53hype and then it dropped down but the
6:55company had never delivered and uh this
6:58can just go deep down and break the
7:01first move right and keep going down
7:03right that can happen it doesn't have to
7:05uh it has basically the move in the
7:07price has to match the fundamentals and
7:09the market expectations it doesn't go
7:11along with
7:12whatever you know we are saying that hey
7:15if some stock has made a first impulse
7:17move and then it moved back to uh where
7:20the first top was now it is time to go
7:23up now the back that the fundamental of
7:25the company has to match right so that
7:27becomes very important and of course
7:29there are validations that we do to uh
7:32these path then when we make it that
7:35it's it's matching to what we see or
7:38what we are hearing in the news right
7:40what what is going on with the company
7:41how their uh quarter on quarter earnings
7:44are coming up and all the kind of good
7:46stuff right now this was just a one
7:49impulse wave and a corrective wave now
7:52let's talk about what happens within the
7:54impulse
7:55waves right and uh what kind of
7:58extensions do we see uh Within These
8:01impulse waves and what are the like
8:03structures in within these uh impulse
8:05waves first right before we go into the
8:07corrector move now this was just a um um
8:12simple impulse wave at a larger degree
8:14but when we start breaking down the
8:16structure of these impulse waves these
8:18are
8:21called um you know there are like Sub
8:24sub waves into this called the uh uh the
8:27fractal structure uh basically within
8:30the waves right so the wave one which I
8:33let me Mark these waves first here wave
8:35one two three four five right wave one
8:39five waves within that right and then
8:41wave three will have five waves within
8:44that itself so Wave 1 3 and five they
8:50all have um five waves with an it let me
8:54just draw them quickly
8:57here all right and and
9:04uh like
9:07this so wave 1 wave three wave five all
9:10five waves in it but the wave two and
9:13wave four they will have um three waves
9:17within
9:20it I already Mark the three waves here
9:23right so this overall impulse structure
9:26looking at the substructure or fractal
9:28structure of these uh waves this is
9:30called a 535 structure right let me just
9:35mark it because wave one was five waves
9:37wave two was three waves wave three is
9:40five waves wave four is three waves and
9:43the wave five is again five waves right
9:44so it's a 53535
9:47structure as such for an Impulse waves
9:50now when it comes to the retracement of
9:54um the waves right so uh when it comes
9:57to the retracement
10:02the before we even actually go into the
10:04retracement let's talk about the basic
10:05rules like the the rules that should not
10:07be breached when you're drawing the
10:09waves so there are three rules to Al
10:12waves for an Impulse move the first rule
10:15is that wave
10:17two cannot go below the start of wave
10:24one right basically your wave two
10:33here uh right
10:35here cannot be like this right it has to
10:38stay above the starting of the wave one
10:41start stay above this this particular
10:43line right and the Fibonacci retracement
10:48when we talk about it is generally about
10:5061 to 78% that's what we call it as a
10:53general uh golden pocket Zone basically
10:57uh and the 6 1 and 78 basically is is a
11:02good place to go right so so wave two
11:05cannot go Below Wave 1 the second
11:10rule that should not be broken is that
11:13the wave
11:15three cannot be the
11:19shortest as compared
11:22to wave one and five so among the three
11:27fast moving directional
11:30uh waves here uh which is wave one three
11:33and five the three cannot be shortest
11:35the three has to be the longest one as
11:38compared to wave 1 and wave five right
11:41now when it comes to wave four the wave
11:45four expected retracement is either
11:5023%
11:5138% or at the max 50% right 38% is a
11:57very sweet spot uh we'll see most of the
11:59waves generally getting up to
12:0338% we can accept 50% as well but the
12:07third main rule which it should not
12:09break is to enter into the territory of
12:12wave 1 which is
12:14basically doing this right it it it
12:18cannot work like that that's that's the
12:20rule which should not be breached so if
12:22this was the breakout point it's going
12:24to stay above that and that becomes your
12:27third rule
12:31wave four cannot
12:34enter into wave
12:39one all right so these are the rules
12:42that are very basic should not be
12:45violated when you are uh marking
12:49something as an Impulse wave all
12:53right now this was how it was first
12:57drafted and the
13:00uh uh drafted and practiced by Mr
13:03Elliott and uh later on some
13:06modifications sches to some something
13:08which is more acceptable in certain
13:11cases more more exceptions basically
13:13right they they and we see them on
13:15day-to-day basis which was
13:18the leading diagonal and the ending
13:21diagonal right and all of this material
13:24is in the in the L8 wave battle cards
13:27right with all the different uh
13:29permutations combinations the different
13:31things which are possible the extensions
13:34the retracement and all the kind of
13:36stuff right and I'll talk about the
13:39extension as well so I talked about the
13:40wave two and wave four retracement uh
13:43let me just uh quickly also get into the
13:46extensions of these wave 3s and wave
13:48fives as well right um uh before I
13:51actually get into the leading and the
13:52ending diagonals right so those
13:55exceptions were made and we'll talk
13:57about it and where are those particular
13:59exceptions can be used right which is
14:01basically the leading and the ending
14:03diagonal so let me quickly first talk
14:05about the extensions and we'll get into
14:07that
14:10so talking about
14:13uh uh the extensions for wave three so a
14:19a very minimal expectation from a wave
14:21three is generally in a in a in
14:24um um you know somewhere around 161%
14:30uh to 200% right 161% again is a very
14:34sweet spot if you see it there and if
14:36you have entered a long uh basically
14:39here on a breakout uh you need to book
14:43profit uh at 161% right this is uh a
14:47kind of um very sweet spot the wave May
14:51extend may not extend but it's a good
14:53place to take the profit right so 161%
14:56can be 200% and can be like 3 61%
15:02recently in the case of
15:04smci I see it going up to 461 per. I
15:07mean that was like very rare case it
15:10doesn't happen like that in generally
15:11generally you'll be limiting somewhere
15:13around 161 to 261 anything beyond that
15:17are the rare cases right so that's your
15:21extension for wave three we talked about
15:24the wave for
15:25retracement and uh when it comes to wave
15:29five a very simple rule that can be used
15:32for wave five is that wave five can can
15:35be equal to the size of the wave one so
15:37you can just see how how big your wave
15:39one was and just apply it here and say
15:43hey this is where your wave five is
15:44going to be right so that's one way of
15:46doing
15:48it and there are extensions where uh you
15:52know wave five extends and the uh you
15:57know how to measure those extens iions
15:59uh is that you start take this extension
16:02tool you start from the point uh where
16:06you started counting your wave one take
16:08it up to all the way to 3 and put your
16:12third point at Point uh wave four bottom
16:15right and you look at uh the 61% and
16:19100% right so if your uh wave five is
16:24going to be equal to wave 1 it'll be
16:27coming somewhere closer to the this per
16:29618 area in this case majorly the wave
16:32three is the is the extended wave or the
16:35longest of all remember it shouldn't be
16:38shortest of all three but it couldn't be
16:41that you know uh it's in the middle
16:44right either your wave five extended or
16:46wave 1 was extended but wave three was
16:49not the shortest it was bigger than at
16:51least one of the wave while it was not
16:53the one which was extended right only
16:56one wave can extend it could be wave one
16:59it could be wave three it could be wave
17:00five but wave three cannot be shortest
17:03so if your five is extended your three
17:06will be still bigger than one right or
17:09any other alternate combinations so
17:12that's another
17:13rule so 618 in a very uh case of
17:17extension where things keep moving this
17:20wave is quite extended you know you'll
17:22see something like this as well where
17:25wave five goes like way too far from
17:29where you counted three and for it it's
17:31no more equal to wave one and keeps
17:33going and makes you think maybe it's
17:35like a very extended wave and keeps
17:37going but now it's just an extended wave
17:39five
17:40right so this was all about uh an
17:43Impulse wave now let's talk about you
17:46know uh uh the exceptions that we said
17:49the leading and the ending diagonal
17:52where do they come into the play and
17:55what are the rules associated with them
17:57right so as the application of the study
18:01was was happening folks started to
18:04seeing waves like
18:18this like this basically a wed w a
18:22wedging B is uh a w sort of a wedge
18:25based
18:26structure uh which happens mostly
18:29after uh a big selloff right um like a
18:33stock was in a major drop down it
18:35dropped and we started seeing this this
18:38wedge formation now this wedge formation
18:41can be seen as a beer flag where you
18:43expect that hey the price is going to
18:45break this and break down in the
18:48continuation before it uh bottoms out
18:51but what happens it kind of doesn't do
18:53that instead it comes down here does a
18:57false breakout and moves moves away
18:59Right Moves In a Different opposite
19:01direction from where it came before
19:03right so this is where leading diagonal
19:06was introduced as an exception where
19:09this wave four basically is overlapping
19:12with the wave one if you see here like I
19:16said it's a rule it should not be
19:18breaker in a normal
19:19impulse but here you see wave four is
19:22entering into the wave one
19:25territory right and uh
19:30so uh this was considered as another
19:35form of an Impulse move wave but it does
19:38it it does not mean that you know you
19:41this is possible now that this four can
19:42be coming into this no there's certain
19:44places where where these leading
19:47diagonals are expected to happen or can
19:50be accepted if that happens right so I
19:52do not start the charting thinking that
19:55this kind of a veg is going to lead into
19:57a uh a good move in the upward direction
20:01or in the opposite direction from where
20:03the reversal from where the first uh
20:06move was like this move down and then
20:08you know it's quite an opposite uh move
20:10out here right before I start assuming
20:14that um you know there are certain
20:17validations that need to be uh made
20:19right which is where we don't see the
20:21cell uh creating new lows here right so
20:23if it does it was simply a be flag right
20:26but it hold somewhere here and we we get
20:29another break out of this wedge towards
20:31an opposite direction to an upward
20:33direction right so that is where we
20:36start using this leading diagonal uh as
20:39in
20:42um uh leading diagonal as a as a use
20:46case and it happens mostly in the wave
20:49one so basically Wave 1 where I mark
20:52this as a normal impulse where wave four
20:54was not intersecting with Wave 1 right
20:57um
20:59uh this is allowed basically if this
21:02would have happened this is this is
21:05allowed with the leading diagonal being
21:10the first wave structure it does not
21:13mean that it is allowed in wave three
21:16like if if you have a wave structure
21:18like this this is this is not a leading
21:21diagonal or ending diagonal it cannot
21:23happen in wave three that's that's a
21:25rule uh which we have to follow when
21:27using leading diag
21:29leading diagonals also get used in
21:31correction patterns I'll talk about it
21:33but um it cannot be in wave three right
21:37now while we are talking about the
21:38leading diagonal let's talk about the
21:40ending diagonal as well which happens
21:42once this wave three is complete here uh
21:46we get into this wave four drop and then
21:49we get into something like
21:52this where again instead of it being an
21:55Impulse which I showed up here you have
21:58a ending wedge right and you are able to
22:01mark it as a wedge again the rules and
22:03the percentages and all that is in the
22:05battle card so I want you to use them we
22:07don't have to spend time on that one
22:09here but the formation and the structure
22:11right
22:12so when this
22:15happens you see a drop after that right
22:19and we can simply mark this as a
22:21complete one 2 3 4 five wave on a larger
22:26degree is just that it start started
22:28with a leading diagonal it ended with an
22:30ending diagonal right just just started
22:32just showing you the used case of these
22:34leading diagonal and and an ending
22:37diagona right these were added on later
22:39on and are well accepted and we see them
22:42on
22:42the everyday
22:45basis right so this was all about an
22:48Impulse or a motive wave now let's start
22:51talking about corrective waves right
22:53correction so now now while we are here
22:56uh let's talk about the first type of
22:58the correction which is going to bring
23:00this whole impulse move uh back down
23:03which we call it as a pullback and uh we
23:06want to you know buy when when that
23:10pullback completes because we expect
23:12okay this whole five waves is going to
23:14lead into a pullback and then maybe
23:16another move upwards after that so
23:19either we are shotting here and uh then
23:21we later on want to buy uh once it
23:23reaches the demand
23:26level right so the first kind of U um uh
23:32correction is called a zigzag correction
23:34so where I told you that um you
23:37know we have a
23:4053535 uh wave structure here we have we
23:43have five waves here three here five in
23:45this one three and five uh zigzag wave
23:49is basically a um 535 so let me just tag
23:55these ones while we are at it um
24:00so this was 53
24:0453
24:075
24:09and this wave is
24:12basically a 535 as a zigzag correction
24:17why it's called 535 because though it's
24:20a three-wave move down instead of a five
24:22wve move up retracing partially it's
24:25labeled as
24:27ABC but when we look internally on a
24:30freal uh we will see that it has five
24:35waves in the first
24:37one three waves in the
24:42middle and then five waves down
24:47again right so this is called a 535
24:51structure and the uh the few basic
24:54principle of this uh wave uh corrected
24:58wave is that your wave B is generally
25:01somewhere from 50 to 60% 60 61% right so
25:06it'll travel somewhere half the way and
25:09uh then the drop will happen and we also
25:11use a rule called a equals c where when
25:14we check the extension of the C wve it
25:18basically ends at 100% extension so
25:20somewhere around there right so just
25:22working it right so 100% a equals to C
25:26both the length of the both waves is
25:28equal marked from the 60 or 50% wherever
25:31it starts to drop and it's called a
25:33zigzag move
25:36down right so now before I go into um uh
25:41you know further correction modes I
25:43wanted to share an example uh here uh
25:48which is basically show say the uh we
25:53have discussed so far right
25:55so it'll help you understand the
25:59application of uh um you know both these
26:03wave structures that we have discussed
26:05right so let's get into that so right
26:09below I have a PayPal weekly chart to
26:12just demonstrate the
26:14same uh concept that we discussed about
26:17where we had uh you know the first
26:20starting when it was launched you know a
26:22leading diagonal basically you know uh
26:25when the company was formed you know
26:28things were coming to the market and the
26:30product was launched and
26:33U uh thisal wallet may not be a very uh
26:37known thing to everybody so everybody
26:39was uh
26:40evaluating what it is and all that kind
26:42of stuff so not very spite up move uh
26:46being an Innovative technology but uh
26:48people still evaluating and slowly
26:50buying up understanding the market and
26:52all say so you see a four-wave uh
26:54overlapping into one but a very very
26:57good example of how the leading uh D was
27:00formed and then you had an explosion out
27:03of this after this small drop like I
27:06explained in the above example instead
27:09of this being a bearish wedge dropping
27:11and crashing down it actually went
27:13upwards and had this blasting uh move
27:16candle you know leading to a new trend
27:19upwards and the v v is now broken with
27:21this candle and taken the rest there and
27:24uh then the stock just moved away right
27:27so good example of leading uh diagonal
27:31here and then you have wave three which
27:32extended up to 300% like I said
27:36realistically I mean 161% is good but if
27:39the stock is doing well the news is
27:42keeping up and they keep delivering 261
27:46per 361 per is is achievable right wave
27:50three and then we got a wave uh four
27:53drop
27:55here uh marked as an ABC and this is a
27:58flat structure we'll talk about this one
28:01uh in a
28:02bit uh in the corrective patterns but
28:05this was a wave four and if you see
28:07measured from the point uh where the two
28:10ended and where three uh two start uh
28:13two ended and up to the three completion
28:16it dipped up to
28:1938% and right from there it was during
28:22the co time and right from there we had
28:24the fifth wave starting so now if you
28:26see a fifth wave was quite EXT Ended as
28:28compared to when I was saying it be
28:30equal to one it could be uh you know uh
28:33100% or 61% it was certainly 100% when
28:36uh measure from the one three and four
28:40points like I like I explained before we
28:42can do it right uh here once more again
28:46yeah it goes up to like almost 100 100%
28:48right so the fifth wave
28:52uh terminated and then the correction
28:55started now if you see the correction
28:57it's self is is is
29:00uh uh you know very impulsive down so it
29:04was clearly counted as 1 2 3 4 five and
29:06if you have a 1 2 3 4 five it cannot be
29:08just alone right it's a part of part one
29:11part of the correction so it was an a
29:13leg and then we had a a bounce for a b
29:16wve here and then we had a a choppy wave
29:20down again so we talked about leading
29:23diagonals being in the in the wave one
29:26and ending diagonals being in the wave
29:29five there is another rule to it uh to
29:32remember that the leading diagonals can
29:34be in the Wave A as well while this was
29:37not a leading diagonal it was a very
29:38clear impulse it could have been like
29:40this that the four overlapped with one
29:42and we had a very choppy drop B and then
29:44a choppy drop but it was a uh impulse
29:47down but it can happen that you get a
29:50choppy drop like this where uh your
29:54first drop is like this you have a b
29:57move and and then you get another choppy
29:59move down so you both you can have like
30:01both uh leading and ending diagonal in a
30:04zigzag with four overlapping with one
30:07and it's it's it's possible uh right so
30:09we have seen this in the past as
30:12well right but this is a good example a
30:14leading diagonal an Impulse down in
30:17opposite direction after this whole
30:19complete impulse happen and
30:21um right and then ending within uh C leg
30:26within ending dag and now we are waiting
30:28for what what happened next and a
30:30question was asked in the morning
30:31session that hey does this mean that now
30:34uh this is complete at exactly at 78% at
30:37a golden pocket we are expecting
30:39something like this so this is very
30:43speculative right so aliot wave is not
30:46to say that hey if this completed and
30:50now it at 78% it means it's going to be
30:52now uh another 10x move or 20x move from
30:56here on a larger degree it can happen
31:00right but it totally depends on the
31:01fundamental of the company and the
31:03innovation of the company and the
31:04revenues and what Market sees as a as a
31:07breakthrough product or uh something
31:09that they see value in and all that kind
31:11of stuff right otherwise this was just
31:14one complete impulse could be marked as
31:17uh an ALG if let's say PayPal is uh a
31:20business which is not going to do well
31:22and they're just going to be not
31:24Innovative anymore this may be an ALG
31:27this may be a b leg with an ABC and now
31:30we may be looking at something of C
31:32rather than a three where it goes up but
31:34not to at that much extent or may it may
31:37go sideways right so it may do another
31:39correction pattern here before anything
31:41else comes up and all that right so at
31:45any moment of time you have to keep
31:47evaluating your uh charts and uh making
31:51sure it's going in the direction the
31:53fundamental align so for example let's
31:55say I made another uh wave one move here
31:59and now if this move dies here I have to
32:02wait and watch sometime we have uh you
32:04know when companies doesn't do much we
32:06have to mark that uh Point as you know
32:09uh uh move X right so it's it's like not
32:14contributing anywhere or doing anything
32:16it's just a sideways move apart of uh
32:20another correction but not really
32:22starting a wave three it it's it's a
32:24period of Silence right or otherwise if
32:26if Market still sees a value and this
32:29was just a institutional manipulation to
32:32bring it all the way down so that they
32:34can fill up their inventores on where
32:35they filled the before we would want to
32:38see a move coming from up from here
32:40right so a break break out should happen
32:43from here and we should see a complete
32:46formation of first move here at least
32:49right so which we can mark it as 1 2 3 4
32:52five like we have it here and post that
32:56again it's not going to just just go
32:58away like that it's going to retrace a
33:01little and then start the move up right
33:04so we'll have to keep validating that
33:06hey the company fundamentals the
33:08revenues are improving it's making the
33:10structure that we want before we start
33:12committing to
33:13it right and in other way if if you
33:17believe in the company basically
33:19hypothetically you like the company you
33:21have a faith in it I mean this is this
33:23provides a beautiful uh you know risk
33:26reward as an inv that you're close to
33:2978% or you actually dipped to 78% where
33:33the whole uh move actually started after
33:36all this accumulation right this is
33:39where your demand zone is your risk
33:40reward is pretty good your stop loss is
33:43going to be just right below this if the
33:44stock drops from here then it's
33:46something else and we'll have to re to
33:48it but as long as it's holding it's uh
33:5178% retracement here and U you want to
33:54enter you can enter and on a break
33:56breakout from 7 before you'll get the
33:58confirmation of your bias that hey you
34:00were thinking it right the company is
34:02going to outperform since the culation
34:04is now complete from the uh Market maker
34:07standpoint they are just uh now going to
34:09mark up the prices right uh the market
34:11orders are going to come in and there
34:12will be a foro which is going to be
34:14leading into the prices going
34:16up right uh so this kind of shows you a
34:20good example of an ending uh diagonal
34:23being used uh in the seal leg a leading
34:27diagonal being used using the one so
34:28basically applying whatever we we
34:30learned up here as in uh different
34:33formations right so ending diagonal
34:35happens in wave five could be in wave c
34:38as well leading diagonals happen in wave
34:40one could be in the Wave A as well of
34:42the correction right so that was about
34:44zigzag wave and
34:47the uh the impulse wave so uh zigzag uh
34:51was a part of the correction now let's
34:54talk about another correction patterns
34:57and will again apply the real time uh
35:00study as
35:02well all right and uh uh let's just go
35:06into that
35:07so call this a
35:10zigzag
35:11um let's draw another one here so we
35:15have this impulse
35:21move right and we got a correction here
35:25the correction did not uh
35:29go like the one which I've shown before
35:31as a zigzag but the B move retraces more
35:35than the 60% or the 50% that I shared
35:38before but it goes all the way up to the
35:39top or maybe a little below that right
35:42and then we see a correction again
35:44coming back down which either comes to
35:47this end point where it ended before or
35:49a little before that right so these wave
35:52structures let me just Mark these ones
35:55up five again again an ABC correction
35:59but they are called the
36:01flats there are like three categories in
36:04flats and this is like a regular flat
36:06where your B goes up to the 90% of your
36:10whole a a drop it's not a dead cat
36:12bounce it's a very strong bounce and
36:15people may think it's a continuation
36:17going to break out but it doesn't it
36:19stops at the supply which uh which is
36:21formed during the sell off and uh
36:26when right so in this sell off and uh
36:30goes test that and the same uh s cycle
36:33start again and you get another leg down
36:35right so you heard that uh from me that
36:39you know in a zigzag you have a 535
36:41pattern the zigzag uh is different from
36:44Flat in a way that flat is a 335 pattern
36:48right so the first leg
36:51is a tree wve
36:55down and another three- wve
37:01up and the last leg is an impulsive leg
37:05where we have five waves down now this
37:08five waves again can be an ending
37:11diagonal like I explained before uh the
37:14four and one can overlap in this seal
37:16like it doesn't have to be it's
37:17generally is very impulsive but it can
37:19be a overlapping wave as well so this is
37:22called a regular flat and a 335
37:26structure right so
37:29335 regular flat again you'll find all
37:32this information in the battle cards uh
37:35up there in the battle card channel
37:37right you can refer to the rules and the
37:40everything else and and compare here and
37:42ask me any questions that you want
37:44to this is your regular flat and again
37:47showing you the uh application here in
37:51our in our PayPal chart and I I like
37:53this chart because it covers kind of all
37:55aspects that I'm talking about here you
37:57see an a a dip with three waves you had
38:00a b formation which went up to the top
38:02and a little above and I'll talk about
38:04this this is also a flat but it's called
38:07expanded uh flat and a seat depth which
38:10went below the
38:13um um the level of the where the a ended
38:16right so a flat structure and expanded
38:19flat and why it is called expanded is
38:22just because that um the move that
38:25happened here for the flat
38:28went little
38:30higher uh little higher than the initial
38:34point right so that's that's a
38:36difference between a regular and
38:38extended that the B can go higher than
38:40that and why why it it it kind of
38:43confuses everybody because everybody
38:45thinks that the supply zone is broken
38:47right and everybody wants to go along
38:49and they think that this wave was
38:51already completed as correction now it
38:53is a start of a new wave up but instead
38:56they are pulled down down and a large
38:58sell comes and all the positions get red
39:00out and you get stopped right
39:02so so very important to understand that
39:06you know where you buy uh and where do
39:09you put your stop and uh should you be
39:12just buying at the breakout or you want
39:14to let the breakout happen a retest of
39:16the Zone happen because the supply needs
39:18to turn into a demand for the next move
39:20to happen but if this was a false
39:22breakout and a liquidity sweep then your
39:25supply is going to stay as Supply and
39:27you were just you know trapped into that
39:30uh liquidity sell liquidity grab that
39:32they were uh you know that they were
39:36trapping
39:37to right or a buy side liquidity trap it
39:40was um and it comes down all the way to
39:44the
39:45C
39:48now this is what I showed you here
39:52before right an expanded flat why an
39:55expanded flat because this B actually
39:57went little above a I mean it would have
40:00if it have stayed here it would have
40:01been just regular flat right now going
40:05back here there is a third category uh
40:08for the flats again all are 335 but in a
40:12third category it goes the B goes above
40:16but the C does not come to the level of
40:18a or below it just hals in
40:20between it's again a 335 but it's called
40:24a running
40:26flat
40:28right running flat basically it's
40:30nothing if you see the B went the B wave
40:33went Above This top of five and C is not
40:36even coming down it's it's showing the
40:38buyers uh eagerness to get into the
40:41stock they don't even want those uh
40:43lower demand levels to be tested the
40:45stock is hot everybody wants to get in
40:47any any drop is like very
40:51small and uh just gets bought right so
40:55that's what the running flat is and why
40:58uh it it's it's hard to get uh you know
41:03a Longs in here because the B went in
41:05here but still you got got trapped right
41:07it happens quite often um in the stocks
41:11which are again very desirable right so
41:14you won't see it very frequently but
41:17something to to keep in uh mind for sure
41:20right and how it can be looked wrong in
41:23a way is that since this was quite sharp
41:26and you have the c-wave down folks might
41:29think that this is one and two and now
41:32there's a three and five right whereas
41:35uh no you will not have a uh one 2 3 4
41:40five uh
41:43sorry instead you're just going to have
41:45a five right so when this drop will
41:48start it will just keep
41:50dropping it's not going to end because
41:52it's it's it's not one 2 3 4 five let me
41:57just market so that you understand but
42:00it was an ABC running flat and you got
42:04this as your five wave
42:10move right so the drop is going to come
42:13larger than what you would expect and
42:15get trapped when you buy it here that
42:17the sell happen right so need to
42:19understand where the regular flat could
42:21have happened and uh your entry and exit
42:23points and all that so this was a third
42:26flat so you learned about a regular flat
42:29where the retracement of B is 90% and C
42:32comes back down to a or below or you
42:36have expanded flat where B goes over but
42:38C still comes down to a uh and you have
42:41this running flat where B goes above and
42:43C doesn't even come near to a right so
42:47this is your uh Third Kind of flat now
42:52the the question comes is where does
42:55these frequently appears right and
42:58before we get into another uh types of
43:01Correction just wanted to help
43:03understand that the
43:06wave uh which is zigzag correction uh
43:09corrective wave zigzag correction It
43:11generally appears in um more than
43:13average times you can say in the wave
43:16two why because when the uh you know the
43:20the rumor is strong the stock is going
43:23up you know the rumor just Fades away
43:25and the stock starts to sell it's a very
43:27aggressive sell right makes sense
43:29because if if the stock or the company
43:31is already established it's not just
43:33going to get sell sold without any bad
43:36news or anything like that but when the
43:38results are not there it's still an
43:40infancy and all that the sell is pretty
43:42fast because people just want to get out
43:44before uh they know what the company is
43:46really going to do in the next coming
43:47year or so right so zigzac happens in
43:51two whereas flats are more of an
43:54accommodation pattern that happens in
43:56the wave
43:58uh four uh the corrective uh the
44:01corrective waves Flats right so they
44:03happen four because uh so all the markup
44:06has happened in three now you know the
44:08big guys they are waiting to see if
44:10company continues to deliver they want
44:12to come late at little lower prices
44:14again they just don't want to keep uh
44:17you know moving it up so they sell it
44:20slowly in different ways uh waves here
44:23right only retracing a portion of it and
44:26then we get another last markup that
44:28they want to run through and empty their
44:29inventories that they complated in wave
44:31for as
44:32right so Flats would generally appear in
44:35wave four like I said zigzags will
44:37appear in wave twos now what other kind
44:40of Corrections do we do we see uh the
44:43other Corrections that do we see
44:45is you know the triangles basically you
44:49had this five wave move up and the after
44:52the five wave move up you uh you get
44:55into something like this let's say
44:59a
45:02triangle
45:05right uh
45:08yeah I mean it was not a five wave move
45:10off it was basically a wave uh uh interm
45:13wave uh just to correct myself there uh
45:16this could be um let's see let's just
45:19fix it so it's not
45:22confusing
45:24um because triangles also generally a
45:27appear in the wave uh three so just want
45:30to make sure it's marked as as right
45:33right so uh uh sorry triangles appear
45:35generally in W four so I wanted to make
45:36sure it's marked right and um this is
45:40how it it goes right so the way you
45:43will mark it as 1 two 3 4 five and these
45:48will be called
45:50as a b c d e right so this corrective
46:00pattern has five legs in it and each leg
46:04has three waves in it so it goes just
46:07like
46:18this right so the pattern itself is
46:22called
46:23a
46:2533333 it's the triangle because each leg
46:30is three waves within it and then the
46:32breakout is basically your wave five
46:35right so this was a third type of
46:38Correction zigzag Flats
46:42triangle right so app again can happen
46:45in wave two as well but generally
46:47appears in wave four and just to show an
46:49example and cost was a very good example
46:52where this happened uh where between
46:552022 uh or yeah 2023 there was a big
46:59triangle which was forming in wave three
47:02right and the stock moved up basically
47:04after
47:06that so A B C D E you know move for the
47:11wave
47:13five so going back to our uh chart
47:19here
47:23now uh the next thing that we should uh
47:26talk about is uh which is a combination
47:29of uh waves which is your you know
47:33complex waves now complex waves are
47:37nothing but a combination of these three
47:39waves which I shared before it could be
47:41as simple as a zigzag first followed by
47:46a move and a zigzag
47:50again right while you have three
47:54waves
47:55here and actually have three waves
47:58within this as
48:01well
48:03here and then you'll have uh three waves
48:07here too they all are zigzag but the way
48:11you
48:13uh put them together is a wxy this is
48:17how the notations work here uh it's a
48:19333 structure it's called a double
48:23zigzag because you had one zigzag and
48:25another zigzag if you combine it with
48:28the third one it can become even uh a
48:30triple combo as another complex where
48:32you had one and another bounce and you
48:35have a third zigzag going on here right
48:39it's uh labeled differently here where
48:42we use you uh you know a little
48:45different pattern here WX YX Z just to
48:49say that it's a longer and a complex uh
48:52more complex than a double combo right
48:55and it doesn't it's it's this is just
48:56just one example I mean uh you can have
48:58something like this as well where your
49:00first drop is uh zigzag in between you
49:04got a
49:05triangle and then another zigzag down
49:09right so uh they appear like that and
49:11there are battle cards talking about
49:13double combo triple combo and all that
49:15familiarize yourself but again I mean
49:18these are uh just a combination of the
49:21different families of correction that I
49:22showed you before and then I said the
49:24families the family is like the zigzag
49:26the FL
49:27and the uh basically your triangle right
49:30so combination of those is what what
49:33makes your
49:36combo all right so now you know what I
49:41want you to do is I like I said I
49:44created a lot of Education material up
49:46there uh there are few things that you
49:48want to familiarize yourself you know
49:51understand the retracement levels you
49:53understand how far wave four can go wave
49:56two can go go right uh where the wave
49:58three can go what are the places where
50:01the reversals can come up so basically I
50:04I shared a lot of Candlestick patterns
50:07right which I want you to be uh focusing
50:10on that okay if the reversal is coming
50:12what should I be looking for right if if
50:15the if if let's say I want to buy for
50:17this uh wave five move and I understand
50:20okay it retrace 38% in a wave four now
50:24what should I expect to see in the price
50:26action the in the price action you want
50:27to see something like that that uh you
50:29know buyers are stepping in and you're
50:31getting a doe or you're getting a hammer
50:33or the previous sell candle was totally
50:35reversed by bullish engulfing or you got
50:37a tweezer bottom and all the kind of
50:40stuff right so this is where your
50:41candlesticks come into play where you
50:44understand that hey this is my
50:45retracement level I see buyers stepping
50:48in let me go and uh buy a along right
50:52you want to buy at the demand and an
50:54expected uh retracement level you don't
50:56want to buy at a supply level you don't
50:58want to buy at a false breakout level
51:00but always try to buy at a demand level
51:02on a on a pull
51:04pack right and another important one
51:07which I said uh is going to be useful to
51:11understand and uh use on uh frequent
51:14basis is is understanding these patterns
51:16as well now these patterns are uh you
51:19know most important for a momentum
51:21Trader mostly a continuation pattern
51:24because what happens I mean when you are
51:26buyer of uh short-term calls and all
51:29that you don't want to buy within
51:31somewhere guessing where the wave four
51:33is going to end and will be a combo or a
51:35zigzag or a triangle you just want to
51:38find something which is already in a
51:40momentum basically in a wave three and
51:43you see some uh you know balancing in
51:46that action like it's it's
51:48moving uh it's moving fast uh and it's
51:51stopping for uh you know refueling or in
51:55the Midway like a wave three going up uh
51:59let me just draw it for you again here
52:01let's say we are in now in a wave three
52:03right this is wave three so when a wave
52:05three happens there are small pullbacks
52:08right there are in between some
52:10breaks right because there are sub
52:13counts on a smaller interval right so
52:15before even the uh larger uh retracement
52:18comes as a wave four or something all
52:21these wave patterns or uh combinations
52:23will come in uh handy that we okay we
52:26are in wave three oh this is a pennant
52:29right or a blue flag uh then here this
52:32is a triangle here right uh uh it's re
52:35and wave are triangle supposed to be
52:37breaking out upwards it's a very small
52:39time frame triangle as compared to uh
52:42the overall wave structure it's going to
52:44continue up right or a small whatever
52:46correction happened here right so you
52:48want to make sure that you understand
52:50these continuation pattern and in the
52:52next few sessions we'll be also talking
52:54about where the double bottom really
52:56happen happens uh you know where are
52:58these wedges like you see this is your
53:00wedge basically an ending diagonal right
53:03or this is yeah ending diagonal right or
53:07on a on a price which is coming down and
53:10this is an ending diagonal on a price
53:12which where it was going up right or
53:15this was a continuation um uh sorry this
53:18was a wave three wave four and a wave
53:20five and a reversal has started right so
53:23we will be talking about all this in the
53:24next few sessions but familiar yourself
53:27with those battle cards review this
53:29recording couple of times try to
53:31understand how to you know label the uh
53:35different uh waves understand where we
53:38are in wave three and wave five and all
53:40that kind of stuff and then we use these
53:42patterns to you know do the breakout uh
53:44study and uh you know go long or go
53:47short where wherever it's kind of
53:50appropriate right so this was all uh
53:53thank you very much uh I know the First
53:55Recording was wasn't right may we had
53:57few questions but I think I've covered
54:00uh most of the stuff um you know what I
54:03had covered but again we can do another
54:05session and uh happy to cover if uh you
54:08had any questions thank you very much
54:10and I'll upload this recording for your
54:12view thank you bye-bye

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