Why I Use This STRANGE Method for Analysing Bitcoin and Stock Markets

Why I use this strange method for analysing bitcoin and stock markets. Most people do not understand why we use Elliott wave theory for forecasting and understanding charts. In this video we explain the key to understanding elliott waves. Fractal patterns and self-similarity provide the basis to elliott waves. But how can we use this method for analysing charts? How can elliott waves help us anticipate what is coming around the corner, or what will likely happen next in the markets? #elliottwave #trading #alessiorastani

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Timestamps:

00:00 Intro
00:44 Misconceptions on elliott waves
01:03 Fractal geometry
03:25 Why elliott waves form in markets
04:25 R.N. Elliott’s forecast in 1940s
05:50 What drives the markets
07:06 Elliott waves and context
08:09 End of Wave 3
08:25 Wave 4 corrections
09:20 ABC corrections and C Waves
09:49 The power of Wave 3
10:18 The Wave core
10:58 End of Wave 5 (last gasp)
11:40 Combine with other methods
11:52 Outro

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Trading has large potential rewards and also large potential risks. You must be aware of the risks and be willing to accept them. Don’t trade with money you can’t afford to lose. We are neither an investment advisory service nor an investment advisor. Data and information provided are solely for educational purposes. Nothing in this channel, videos and the information provided in it should be construed as a recommendation to buy or sell stocks, ETFs, futures, indices, forex, cryptocurrencies, commodities or any market. The past performance of any trading system or methodology is not necessarily indicative of future results. Current analysis can change due to future market events. Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated, therefore anyone considering it should be prepared to lose their entire investment.

Hi l I hope you’re well in this video I want to explain to you the number one reason why I use Elliot waves for chart analysis now you may recall a while ago I already made a video which you probably saw as to why I use Elliot

Waves I explained that Elliot waves have nothing to do with astrology or Nostradamus but in fact Elliot waves are based on phenomena that occur in nature now if you’ve not seen that video the good news is I’m going to play for you one more time what I said back then

About Elliot waves but if you have already seen that video well this will be a nice refresher for you but at the end of this I’m going to add for you some new material so make sure you watch the end of this video and I’m going to

Mention some of the important ways you can use Elliot waves to improve your chart analysis all right guys so first let’s dig into the video with what I said back then about Elliot waves and at the end of this video we’ll come back and I’ll mention some new important

Material thanks some people were saying that all this Elliot wave stuff uh was Nostradamus you know looking into the crystal ball to see the future and some people were saying oh this is astrology or things like that honestly guys it seems to me that some people do not

Understand why we apply and use Elliot wave theory so very quickly the key behind Elliot wave theory is simply fractals or fractal geometry so what are fractals the physicist Alan Guth says in his book The inflationary Universe he says a fractal is a geometric figure in which a pattern is repeated at infinum

On smaller and smaller scales actually I think probably a better definition of a fractal is what’s given by James gleck in his book chaos I’m sure you’ve heard of Chaos Theory well chaos theory is also called The Butterfly Effect and here’s the thing guys in this book chaos

We learn that fractal systems things which are fractals exhibit something called self-similarity in fact fractals are self-similarity in other words fractals are simply things which look roughly the same at different scales especially on smaller and smaller scales it’s a bit like Russian dolls you know those Russian dolls which I think are

Called matkas when you open one there’s a smaller doll inside and when you open that one there’s another smaller doll and so on and so on so many decades ago scientists found that certain things in nature certain systems exhibit fractal geometry which means on smaller and smaller scales they look similar or

Roughly the same as the bigger Parts okay I’ll give you an example here think of the branches of a tree or the leaves of a tree so when you look at the branches of a tree notice that they subdivide the branches subdivide into smaller but similar versions of the

Bigger part you see fractals and self-similarity also in blood vessels in human blood vessels you see it on the coastlines interestingly the physicist Alan Guth says in his book the inflation universe that the Multiverse the system of multiple universes also exhibits self-similarity or fractals okay let’s go back to what we’re talking about

Fractals so back about a hundred years ago Ralph Nelson Elliot he found that even in financial markets you see fractals so what Elliot discovered was that in the financial markets you see five waves move in the direction of the larger Trend but three waves against and he found that this pattern repeat repats

Itself on smaller and smaller scales again in the financial markets so for example each wave as you can see on this chart each wave subdivides into smaller versions of itself of the bigger part on smaller and smaller scales so you have waves within waves within waves like Russian dolls and similar with branches

Of a tree as we discussed so in other words guys fractal geometry occurs in nature as well as in the financial markets now you’re probably thinking well why does this pattern occur in the markets in the first place why does this Elliot wave pattern occur in the financial markets well here’s the thing

Guys according to Bob pror and his phenomenal work in the socionomic theory of Finance human behavior and mass psychology creates waves of social mood which leaves an imprint leaves a signature on the markets so when you think about it human beings we are emotional creatures we’re also irrational creatures and what investors

And Traders do in the markets and this could be any Market could be stock markets Bitcoin gold whatever what people do in the markets when they’re buying and selling in other words the way of social mood among investors and Traders from anxiety fear uh to Euphoria and greed these waves of social mood

They leave their signature they leave their imprint their Trace in the markets and interestingly it follows a fractal pattern again remember what we discussed about what fractals are and that is why we see this fractal pattern this Elliot wave pattern in the market as Ralph Nelson Elliot discovered by the way RN

Elliot was able to use his Elliot wave theory to predict and forecast a minimum 80y year long bull market back from the 1940s so back in the 1940s Elliot said we’re going to be in a bull market for at least 80 years at the time people thought it was crazy people were saying

To Elliott how can it be bullish on the market when we have a war the second world war in our hands but Elliot was able to use his wave patterns to forecast this minimum of 80e long bull market back from the 1940s which of course he was correct about by the way

Guys one of the key reasons why I love and I use Elliot wave theory is is because it’s the only method of analysis out there that provides context no other method of analysis can give us that in fact Bob pror agreed with me on this point that it gives you context like a

Big picture or map of the market of course we’re talking about probabilities here but that’s all you need to give you an idea of where you potentially are in the big picture and look for turning points a lot of people Miss turning points because they’re looking at the

Market from a linear perspective as opposed to a nonlinear chaotic perspective as we find in T patterns and also in Elliot wave theory all right guys I’m hoping in this brief introduction I managed to persuade you that Elliot wave theory is not some Hocus Pocus crystal ball magic or Voodoo

As some people say you know like Nostradamus or astrology no those people have no idea what they’re talking about as I mentioned Elliot with theory is simply using the fractal geometry that exists in nature by the way this subject of fractals and social mood which is essentially what drives the markets

Reminds me of the work of the French philosopher Michelle Fuko I’m actually reading series of works on Power by Michelle Fuko in this book and Michel fuko’s ideas on power are really interesting and fascinating and what Fuko says is that power does not necessarily work top down like what a

Lot of people believe no actually it can work also bottom up in fact as Michel Fuko famously says power is everywhere so with the financial markets a lot of people think that the reason why markets move in One Direction or another is because there has to be some omnipotent

Agency like the Federal Reserve or the government to push the market in One Direction or another in other words they think the Federal Reserve drives the market actually that is not correct as Bob pror has argued in his book The socionomic Theory of Finance it is not the Federal Reserve that drives the

Market it’s the opposite it’s the other way around it is the market that drives the Federal Reserve decisions again it is human behavior emotions and mass psychology that creates waves of social mood that ultimately drives the markets more on this by the way in a separate

Video but that also is what Michel Fuko argues on power power is a productive force that occurs organically within society and systems all right guys welcome back so thank you very much for watching that video so what I’m going to do now in this section of the video is

Just explain very briefly some of the ways in which you can use Elliot waves to improve your chart analysis so as I mentioned before one of the key benefits of Elli wave theory is that it can help you identify what is coming around the corner in other words because it gives

You context in fact it’s the only method of analysis that gives you an idea where you are in the big picture like a map so one of the main strengths in Elli wave theory is you have an idea the turning points in the markets you see a lot of

People who just follow Trends people who just simply follow Trends and movements in the price they often miss or ignore what is coming around the corner the key turning points the key inflection points in the markets so what often happens is when price is rallying higher people

Just assume the trend will just continue forever and similarly when price is going down declining people assume that the trend to the downside will just continue forever eternally so the fundamentally great thing about elied w theory is that if you can identify with a high probability as to where you are

In the wave count you can also identify with a high degree of probability as to what’s going to likely happen next I’ll give you an example if your analysis is telling you that you’re at the final stage of wave three so for example if you’ve done your chart analysis and

Let’s say you believe that you’re in the wave five of wave three the Final Phase of wave three then you can prepare yourself for the wave four correction now here’s something you need to know about wave four wave four Corrections are not necessarily clean and precise like this in fact wave four Corrections

Can be very messy unpredictable and very choppy in their movements so if you believe based on your analysis that you’re coming to the end of wave three what’s called The Wave five of wave three then you should prepare yourself for wave four correction okay and again wave four Corrections because they’re

Messy and unpredictable and choppy then that allows you to prepare for risk not just risk in the markets but also risk mentally because often way for correction can be very frustrating emotionally and mentally for Traders and investors so therefore being prepared for a potential W for correction can

Really help us to the turning point in the market and that also means a Trader could potentially prepare himself for a way for correction by taking profits for example he could take partial profits or maybe establish a hedge to protect against a downside risk now here’s another good use of Elliot wave theory

We know that Corrections are formed of three waves what’s called ABC Corrections if you’ve done your analysis and your research and you believe that you’re coming to the end of the wave C of the correction for example wave two Corrections or wave four Corrections so

Let’s say you’ve had a major big move up and let’s say you’ve had a three-wave correction in other words an ABC correction let’s say as an example you’re coming to the end of the c-wave of wave two then you ought to prepare yourself for potential wave three and

That is important because wave three is typically the strongest and most dynamic part of a trend It’s usually the longest wave but it doesn’t have to be the longest wave and by the way guys that’s a common misconception a lot of people think that wave three is always the

Longest wave in a trend not true sometimes the wave five can be the longest wave the rules of Elliot wave theory simply say that wave three can never be the shortest impulse wave so out of the three waves waves 1 three and five wave three can never be the

Shortest wave it is typically the longest but it doesn’t have to be and here’s another important way you can use Elliot wave theory we’ve already said that wave three is typically the strongest and most dynamic part of a wave but did you know that within wave three the strongest most powerful part

Of that wave three is the wave three of the wave three this is what’s often called The Wave Three core by the way if you’re confused by this terminology all that means is because wave three of a trend is subdivided into five waves the wave three within the wave three is the

Strongest and most powerful part of the wave three so what that means for Traders is that what they could do is wait until the beginning of that wave three of the wave three before they establish a position and finally we know that wave five is the last final part of

A trend what’s often called the last gasp stage the last climax in the market or in the trend so therefore if based on your analysis you believe you’re in the final wave the wave five of the wave five that means you should prepare yourself for potential reversal a key

Inflection point as an example if you believe you’re coming to the wave five of the wave five the last portion the last section of a trend to the upside then that means we’re getting very close to potential top and the market then a Trader in that situation could decide to

Take more profits and perhaps even protect themselves against some kind of downside risk in case the market then breaks support and then starts a reversal in the pattern now by the way you should always combine other technical methods too for example a break of support or maybe some kind of a

Topping pattern or something like that so you can combine other technical methods with Elliot waves to increase the probability all right guys I’m hoping this video is helped you in some way thank you very much for watching and I look forward to seeing you in the next video update bye for now