{"id":6891,"date":"2011-07-27T08:25:59","date_gmt":"2011-07-27T02:55:59","guid":{"rendered":"index.php\/2011\/07\/27\/the-psychology-of-technical-analysis-ch-14-15\/"},"modified":"2011-07-27T08:25:59","modified_gmt":"2011-07-27T02:55:59","slug":"the-psychology-of-technical-analysis-ch-14-15","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2011\/07\/27\/the-psychology-of-technical-analysis-ch-14-15\/","title":{"rendered":"The Psychology of Technical Analysis: Ch. 14-15"},"content":{"rendered":"

\"PTA\"<\/a>The Elliot Wave<\/a> Principal: Stock market averages rise in 5 \u2018waves\u2019 and fall in 3 \u2018waves\u2019<\/strong><\/p>\n

The Elliot Wave Principal (EWP) has a strong following amongst technical traders. However, nobody, including Elliot himself, has been able to explain why<\/em> it works and remains an extraordinarily complex system to apply.<\/p>\n

EWP applies to all<\/em> degrees of price movements. In a 5-3 bull\/bear cycle, the first 5 waves themselves are composed of smaller 5-3 bull\/bear cycles, etc. So each 5-3 cycle is actually part of a larger, higher-degree cycle.<\/p>\n

Indications<\/h3>\n

\"File:Elliott<\/p>\n

The emergence of a 5-wave impulse pattern, either upwards or downwards, indicates the direction of the long-term trend. A rising 5-wave pattern after a sharp fall would indicate further rises, while a falling 5-wave pattern after a sharp rise would indicate further loses.<\/p>\n

Within each 5-wave movement:<\/p>\n