What is Elliott Wave Theory?(엘리엇 파동 이론이란 무엇입니까?)

What is Elliott Wave Theory?

엘리엇 파동 이론이란 무엇입니까?

 

Elliott Wave Theory is a method of technical analysis that traders use to analyze and quantify price patterns in financial markets by looking at cycles. The theory believes that changes in investor sentiment and their psychology creates impulse waves and corrective waves inside the larger trends in market price action.

엘리엇 파동 이론은 거래자가 사이클을 살펴봄으로써 금융 시장의 가격 패턴을 분석하고 수량화하는 데 사용하는 기술적 분석 방법입니다. 이 이론은 투자자 심리와 심리의 변화가 시장 가격 행동의 더 큰 추세 내에서 충동파와 수정파를 생성한다고 믿습니다.

The theory attempts to forecast market trends by identifying the most extremes in trader’s collective psychology that create the highs and lows in price action.

이론은 가격 행동의 최고점과 최저점을 생성하는 거래자의 집단 심리학에서 가장 극단적인 것을 식별함으로써 시장 동향을 예측하려고 시도합니다

Ralph Nelson Elliott developed the theory of the underlying principles and created the analytical tools back in the 1930s. He believed that prices in markets play out in specific wave patterns, which his followers call ‘Elliott waves’. In 1938, he published this theory of market behavior in his book ‘The Wave Principle’. In 1946, he covered his Elliott Wave Principles most completely in his final book: ‘Nature’s Laws: The Secret of the Universe’.

Ralph Nelson Elliott는 1930년대에 기본 원리 이론을 개발하고 분석 도구를 만들었습니다. 그는 시장의 가격이 그의 추종자들이 '엘리엇 파동'이라고 부르는 특정 파동 패턴으로 움직인다고 믿었습니다. 1938년 그는 그의 저서 '파동의 원리'에서 이러한 시장 행동 이론을 발표했습니다. 1946년 그는 마지막 저서인 '자연의 법칙: 우주의 비밀'에서 엘리엇 파동 원리를 가장 완벽하게 다루었습니다.

Elliott wave analysts believe that each wave has its own characteristic, which usually is a reflection of the psychology of the current market move. Understanding the characteristic is thought to be the key to the correct use of the Elliott Wave Principle.

Elliott 파동 분석가는 각 파동이 고유한 특성을 갖고 있으며 이는 일반적으로 현재 시장 움직임의 심리를 반영한다고 믿습니다. 특성을 이해하는 것이 엘리엇 파동 원리를 올바르게 사용하는 열쇠로 생각됩니다.

Elliott Wave definitions below assume a bullish stock market; the characteristics apply as the opposite in bear markets.

아래 Elliott Wave 정의는 강세 주식 시장을 가정합니다. 특성은 약세장에서 반대로 적용됩니다.

 

The five wave pattern inside the dominant market trend.

지배적인 시장 동향 내부의 5 가지 물결 패턴.

Wave 1: Wave one is rarely obvious at its inception. When the first wave of a new bull market begins, the fundamental news is almost universally negative. The previous trend is considered still strongly in force. Fundamental analysts continue to revise their earnings estimates lower; the economy probably does not look strong. Sentiment surveys are decidedly bearish, put options are in vogue, and implied volatility in the options market is high. Volume might increase a bit as prices rise, but not by enough to alert many technical analysts.

웨이브 1: 웨이브 1이 시작될 때 거의 명확하지 않습니다. 새로운 강세장의 첫 번째 물결이 시작되면 기본 뉴스는 거의 보편적으로 부정적입니다. 이전 추세는 여전히 강력하게 유효한 것으로 간주됩니다. 펀더멘털 애널리스트들은 수익 추정치를 하향 조정하고 있습니다. 경제는 아마 강해 보이지 않을 것입니다. 심리 조사는 확실히 약세이고 풋옵션이 유행하며 옵션 시장의 내재 변동성이 높습니다. 가격이 상승함에 따라 볼륨이 약간 증가할 수 있지만 많은 기술 분석가에게 경고할 만큼은 아닙니다.

 

Wave 2: Wave two corrects wave one, but can never extend beyond the starting point of wave one. Typically, the news is still bad. As prices retest the prior low, bearish sentiment quickly builds, and “the crowd” haughtily reminds all that the bear market is still deeply ensconced. Still, some positive signs appear for those who are looking: volume should be lower during wave two than during wave one, prices usually do not retrace more than 61.8% of the wave 1 gains, and prices should fall in a three wave pattern.

Wave 3: Wave three is usually the largest and most powerful wave in a trend, although some research suggests that in commodity markets, wave five is the largest. The news is now positive and fundamental analysts start to raise earnings estimates. Prices rise quickly, corrections are short-lived and shallow. Anyone looking to ‘get in on a pullback’ will likely miss the boat. As wave 3 starts, the news is probably still bearish, and most market players remain negative; but by wave 3’s midpoint, ‘the crowd’ will often join the new bullish trend. Wave 3 often extends wave 1 by a ratio of 1.618:1.

Wave 4: Wave four is typically clearly corrective. Prices may meander sideways for an extended period, and wave four typically retraces less than 38.2% of wave 3. Volume is well below than that of wave 3. This is a good place to buy a pull back if you understand the potential ahead for wave 5. Still, 4th waves are often frustrating because of their lack of progress in the larger trend.

Wave 5: Wave five is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average investors finally buy in, right before the top. Volume is often lower in wave 5 than in wave 3, and many momentum indicators start to show divergences, prices reach a new high but the indicators do not reach a new peak. At the end of a major bull market, bears may very well be ridiculed, recall how forecasts for a top in the stock market during 2000, 2007, and 2020 were all rejected.

Three wave pattern the corrective trend.

Wave A: Corrections are typically harder to identify than impulse moves. In wave A of a bear market, the fundamental news is usually still positive. Most analysts see the drop as a correction inside an active bull market. Some technical indicators that accompany wave A include increased volume, rising implied volatility in the options markets and possibly a turn higher in open interest in related futures markets.

Wave B: Prices reverse higher, which many see as a resumption of the now long-gone bull market. Those familiar with classical technical analysis may see the peak as the right shoulder of a head and shoulders reversal pattern. The volume during wave B should be lower than in wave A. By this point, fundamentals are probably no longer improving, but they most likely have not yet turned negative.

Wave C: Prices move impulsively lower in five waves. Volume picks up, and by the third leg of wave C, almost everyone realizes that a bear market is firmly entrenched. Wave C is typically at least as large as wave A and often extends to 1.618 times wave A or beyond.

Elliott wave rules and guidelines:

A correct Elliott wave count must observe three rules:

Wave 2 never retraces more than 100% of wave 1.

Wave 3 cannot be the shortest of the three impulse waves, namely waves 1, 3 and 5.

Wave 4 does not overlap with the price territory of wave 1, except in the rare case of a diagonal triangle formation.

A common guideline called ‘alternation’ observes that in a five-wave pattern, waves 2 and 4 often take alternate forms; a simple sharp move in wave 2, for example, suggests a complex mild move in wave 4. Corrective wave patterns unfold in forms known as zigzags, flats, or triangles. In turn these corrective patterns can come together to form more complex corrections. Similarly, a triangular corrective pattern is formed usually in wave 4, but very rarely in wave 2, and is the indication of the end of a correction.