Posted on December 16th, 2008 at 10:13 AM

One of the major issues people usually have with Elliott Wave theory is the fact that the wave counts can change. This is a BIG problem for those people who exclusively use the Elliott Wave count, and depend completely on their ability to find the correct count at all times. The way we do things with Advanced GET is to always have complimentary indicators verify the count seen on the screen. The Oscillator we use helps us not only to confirm the count we see, but also to let us know when we should NOT believe the count seen on the screen.

In today's Euro on a 3-minute chart, there was a classic example of a Wave 5 recounting to a Wave 3. We can predict when this happens by watching the strength in the oscillator. Typically, Wave 5's oscillator strength should be LESS than what was seen during Wave 3. The oscillator, being an indication of momentum, should show less momentum in Wave 5 than in 3. If it does NOT, then we have a good chance of seeing the 5 recount to an extension of the original 3.

It started out as a typical Type One trade with a textbook oscillator pulling back to zero during Wave 4.

Wave 5 started out normal, making a higher high than Wave 3, and when it first formed, had less momentum. However, the oscillator eventually overtook the magnitude of Wave 3.

8 bars later, the Elliott Waves recounted the 5 to a 3. You would have been able to anticipate this change in count simply by recognizing that the oscillator in 5 was larger than that of Wave 3.

Having the right knowledge of your tools makes all the difference in trading. For those of you who are consistently surprised when the wave count changes, perhaps you need to re-examine the education we have included with the software that teaches about the usage of the oscillator.

Be Prepared!

Nate McCartney

Additional Resources:

Join us at a FREE online seminar for Advanced GET.
Check out the entire feature list for Advanced GET.