TIMESTAMPS
00:23 - UTILITY
Using a Parallel Channel with Elliott Waves is extremely powerful.
We can use the pivots of each Wave to construct the channel.
These channels can give us price targets and invalidations.
They can help us understand when a Correction or Impulse has finished.
01:08 - IMPLEMENTATION
For ZigZags, take your channel from the start of Wave A to the end of Wave B.
The parallel line is then placed from the termination of Wave A.
Wave C of the ZigZag can move beyond the channel or end before, but it should not directly end at the channel touch.
If it does, then is it more likely part of a complex Correction.
When the top of the parallel channel is broken, Wave C (and the larger Corrective pattern) is probably over.
If what you think is an Impulse pattern channels perfectly, it is likely a complex double or triple ZigZag Correction.
02:20 - EXAMPLE 1
How to create a channel for a ZigZag Correction.
First touch is the start of Wave A, second touch end of Wave B, third touch end of Wave A.
03:13 - EXAMPLE 2
For channels on Flats, we can create horizontal lines from the start and end of Wave A.
03:54 - IMPLEMENTATION CON’T
For an Impulse Wave 3, take your channel from the start of Wave 1 to the end of Wave 2.
The parallel line is then placed from the end of Wave 1.
For a Wave 5 Impulse, take your channel from the end of Wave 2 to the end of Wave 4.
The parallel line is then placed from the end of Wave 3.
04:18 - EXAMPLE 3
Using a Parallel Channel to create a target for Wave 4.
To get a target for Wave 4 using a channel: first touch top of Wave 1, second touch top of Wave 3, third touch bottom of Wave 2.
04:39 - EXAMPLE 4
Using a Channel to create a target for Wave 5.
To get a target for Wave 5 using a channel: first touch from the end of Wave 2, second touch end of Wave 4, third touch end of Wave 3.
Target = the middle or top of the channel for Wave 5.
Remember to use Fib Time and Extensions to aid this prediction.
05:55 - EXAMPLE 5
If Wave 3 is very extended, we can take the 3rd touch point from the end of Wave 1 instead of Wave 3.
06:12 - IMPLEMENTATION CON’T
Trend lines are used to let us know when a Wave has finished.
We can connect the start and end of Waves to create trend lines.
If the 0-2 trend line is real, no part of Wave 3 should break the trend line.
The break of the 2-4 trend line must be in the same amount of time consumed by Wave 5 or less. If the break takes more time, then we are seeing a Terminal Impulse.
07:42 - EXAMPLE 6
The 0-2 trend line is taken from the start of Wave 1 to the end of Wave 2.
As price action with Wave 2 breaks through the trendline, we must adjust it to the real end of Wave 2. The old trend line would be removed once traded through.
When price breaks through the top of Wave 1 we believe Wave 2 is finished, thus we are left with the 0-2 trend line.
09:29 - EXAMPLE 7
The 2-4 trend line is taken from the start of Wave 2 to the end of Wave 4.
As price action with Wave 4 breaks through the trend line we must adjust it to the real end of Wave 4. The old trend line would be deleted once traded through.
When price breaks through the top of Wave 3 we believe Wave 4 is finished, thus we are left with the 2-4 trend line.
10:25 - IMPLEMENTATION CON’T
When the 5th Wave of an Impulse has completed, a correctly drawn 2-4 trend line must be broken in the amount of time it took Wave 5 to form or less.
If the break takes more time, there are 2 possible scenarios:
I) Wave 5 is developing into a Terminal Impulse pattern.
II) The 2-4 trend line is incorrectly drawn, and Wave 4 is not yet finished.
The 0-B trend line is taken from the start of Wave A to the end of Wave B.
The 0-B trend lines are in ZigZag and Flat Corrections.
Once the 0-B trend line is broken, it means the Correction is probably finished.
When a Triangle breaks its B-D trend line, it means the Triangle Correction is probably finished.
11:52 - EXAMPLE 8
The 0-B trend line is taken from the start of Wave A to the end of Wave B.
As price action with Wave B breaks the trend line, we must adjust it to the real end of Wave B. The old trend line would be deleted once traded through.
When price breaks through the bottom of Wave A we believe Wave A has finished, thus we are left with the 0-B trend line.
The 0-B trend line on Flats and ZigZags.
Always take a Parallel Channel 3rd touch point from the end of Wave A.
13:17 - EXAMPLE 9
The B-D trend line for a Triangle.
Once the B-D trend line is broken, the Triangle Correction has likely finished.
13:36 - TIPS & TRICKS
*If price is channeling perfectly, it is generally Corrective price action.
*Use channels to get targets and invalidations, but ALWAYS use them with confluence.
*The 0-2 and 2-4 trend lines let us know when Corrective Waves 2 and 4 have finished.
*Once a 0-2 trend line is broken, we are given a big heads up that Wave 3 has finished.
*Once a 2-4 trend line is broken, we are given a big heads up that Wave 5 has finished.
*Once a 0-B trend line is broken in a ZigZag, we are given a big heads up that the ZigZag Correction is over.