Forex: Look Twice, Triangles Are Everywhere
By Vadim Pokhlebkin
Elliott Wave International
You don’t have to squint to see them. Watch currency market charts long enough and you’ll see them everywhere: those moments on a chart when the market first swings wide up and down, then less so, then the swings narrow even more… Then for a while it seems the market is stuck, going only sideways, until – boom! – it launches into a wild spike that takes it far, far, and away.
Triangles. That’s what Elliotticians call those contracting swings in the charts. In fact, one of the triangle patterns in Elliott wave analysis is called just that: a “contracting triangle.” It’s usually a sideways move comprised of 5 waves, A-B-C-D-E. They most commonly form in 4th waves. And when one ends, the resolution is usually sharp and swift. “Triangles appear to reflect a balance of forces,” says Prechter and Frost’s Elliott Wave Principle – Key to Market Behavior. “When a triangle occurs in the fourth wave position, wave five is sometimes swift and travels approximately the distance of the widest part of the triangle.” Here is an idealized diagram:
Get immediate access to all EWI’s trading articles by joining ClubEWI. There is no cost or obligation.
RSS
