Elliott wave theory applied on Copper and identifying trade setup.
Technical analysis is the objective way for forecasting the
direction of prices through
the study of past market data, primarily price and volume. Elliott wave theory is the advanced technical tool and it helps to
understand probability about markets. By knowing the wave patterns, you’ll know
what the markets are likely to do next and (sometimes most importantly) what
they will not do next. By using the Elliott Wave Principle, you
identify the highest probable moves with the least risk.
We are all familiar with high
volatility in commodity market. Many market participants find difficulties in
trading commodities. Elliott wave theory help to understand the nature of the
trend and help us to anticipate the short, medium and long term view. Below we
have shown daily chart of Copper which follows Elliott wave counts in a very
accurate way and predicting the patterns in systematic way.
MCX Copper Daily continuous chart:
We can observe in daily chart of MCX Copper, since April to 2013
we have witnessed strong consolidation in triangle pattern in the form of wave
B. Thereafter, prices have breached the pattern on downside and moved lower in
an impulsive way in the form of wave C and moved lower till 360. Near 360 MCX
Copper has formed bottom and rallied sharply till 515 levels. Up move from 360
to 515 has formed impulsive structure.
Basic rules of Elliott wave:
a. Wave 2 should not move beyond wave 1.
b. Wave 3 cannot be the shortest of wave 1 and wave
c. Wave 4 should not enter in the territory of wave
Above we have given basic rules which have to be
adhered strictly. Apart from this there are many other guidelines of Elliott
wave theory which we use along with simple technical analysis i.e. channeling
technique, momentum indicators, etc…
perspective, once we know how the movement is going to be and the wave
count, we have to use bar techniques, break of channel and a higher high higher
low formation to confirm the reversal. Also faster retracement of last falling
segment provides first positive confirmation and Fibonacci provides the
projection levels. Even 61.8% retracement method can be used for trade setup.
To get internal wave counts on MCX Copper and detailed
explanation subscribe to our daily research report “The Commodity Waves
Short term update”. Along with MCX Copper this report also covers MCX Gold,
Silver and Crude.
Intraday traders can also avail our calls
on all 9 commodities traded on MCX exchange through SMS or Yahoo
messenger with proper follow up and efficient Risk reward ratio.
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