Trading Schools & Theories

Thank you for choosing to explore this journey with us. We are here to support you every step of the way. The Authors, Qusai Mustafa Fayrouz Ahmed Shaima Ghazy Ahmed Elshiakh Karim Selim Jessica Capati “one day, or day one” Salaam AL Baset ~ Preface ~

1 - Introduction Schools & Theories 2 - Classical School and Theories 63 What are Schools and Theories4 777777777777777777777777777777777777777777777 777777777777777777777777777777777 8 6 Table of Contents 63 Classic Technical School 777777777777777777777777777777777777 13 16 17 19 20 23 24 A. Chart Pattern B. Support and Resistance C. Indicators D. Trend Analysis A.Theories 77777777777777777777777777777777777777 77777777777777777777777777777777777777777777777777777777777 77777777777777777777777777777777777777777777777777777777777 77777777777777777777777777777777777777777777777777777777777777777777777777777 77777777777777777777777777777777777777777777777777777777777777777777777777777777777 777777777777777777777777777777777777777777777777777777777777777777777777777777777777 14 9 B. Schools C. Difference of Schools and Theories 7777777777777777777777777777777777777777777777777777777777777777777777777777777777777 10 “3 Dow Theory ¦3 Elliot Wave Theory ¯3 Gann Theory 29 30 31 34 35 36 37 40 42 43 44 45 53 54 60 64 66 A. Market Discounts Everything B. Three Kinds of Market Trends C. The Three Phases of Primary Trend D. Market Indices Must Confirm Each Other E. Volume Must Confirm the Trend F. Trend Exist Until Clear Reversal Occurs A. Core Structure A. Key tools B. Cycle B. Gann Angles C. Fractal Nature C. Application in Trading D. Rules and Guidelines E. Fibonacci and Elliot F. Practical Application 777777777777777777777777777777777777777777777777777777777777777777777777777 7777777777777777777777777777777777777777777777777777777777777777777777777777777777 7777777777777777777777777777777777777777777777777 7777777777777777777777777777777777777777777777777 77777777777777777777777777777777777777 7777777777777777777777777777 7777777777777777777777777777777777777777777777 77777777777777777777777777777777 7777777777777777777777777777777777777777777777777777777777777777777777 777777777777777777777777777777777777777777777777777777777777777777777777777 77777777777777777777777777777777777777777777777777777777777777777777777777777777777777777777 7777777777777777777777777777777777777777777777777777777777777777777777777777 77777777777777777777777777777777777777777777777777777777777777 7777777777777777777777777777777777777777777777777777777777777777777 77777777777777777777777777777777777777777777777777777777777777777 7777777777777777777777777777777777777777777777777777777777777777777777777777777 77777777777777777777777777777777777777777777777777777777777777777777777777777777777 7777777777777777777777777777777777777777777777777777777777777777777777777777777 77777777777777777777777777777777777777777777777777777777777777

 Wckoff Method 67  92 90 103 105 107 109 111 124 126 127 128 129 130 132 153 157 156 158 150 B. Gartle Pattern F. Pillars of Volume Spread Analsis C. Butterfl Pattern C. The Law of Effort and Result C. Order Block D. Bat Pattern E. Crab Pattern F. Shark Pattern A. Price Ccle                     99 71 B. The Composite Man C. Suppl and Demand D. Comparative Strength Analsis E. Point and Figure Count Ccle F. Five Step Approach      101 75 76 78 85 88 A. Fibonacci A. The Law of Suppl and Demand A. Market Structure B. The Law of Cause and Effect B. Liquidit D. Resistance & Crowd Behavior D. Fair Value Gap E. Strong and Weak Holders A. Price Action and Candlesticks 3 - Harmonic Schools 4 - Price Action School 5 - Volume Spread Analsis 6 - Smart Mone Concept Table of Contents

"The market is not a random walk, but a reflection of mass psychology and economic fundamentals." Charles Dow

Part -1 Introduction Schools & Theories in Trading

1. Schools & Theories in Trading

What are the Schools & Theories in Trading? In developing a consistent trading system, the schools and theories pave the way as one of the most important topics. What is a School? Schools of Thought, refer to the most popular consensuses/philosophies among traders. In which, there are certain beliefs that guideline certain acts in different market conditions. These Trading Schools are usually made up of general facts about the market, along with popular theories as their pillars. What is a Theory? Theories refer to a set of statements that have been proven and repeatedly tested to be true, which is why they provide a basis for speculation or prediction, alongside other theories or facts. Theories are many. Some theories focus on the principles of trading as a whole like “Random Walk Theory”, whilst other theories focus on the principles of technical analysis like “EMH”. Many theories discuss many things, however the primary focus will be the most important in terms of your trading journey. 8

A trading theory is an approach, or idea, that seeks to explain how markets function, why prices move the way they do, and how traders can use this knowledge to make informed decisions. A. Theories in Trading Some theories focus on market efficiency and randomness, like the Efficient Market Hypothesis while others emphasize trends and investor psychology, such as Dow Theory and Behavioral Finance. Additionally, modern approaches like Market Microstructure Theory and Algorithmic Trading Models provide insights into high-frequency trading and liquidity dynamics. Many successful traders and investors have built their careers using these theories. Schools & Theories within Market Analysis Trading is a vast field within finance and economics, with many perspectives and methods. However, market analysis generally falls into two main categoriesž › Fundamental Analysis – Focuses on economic and financial factors© › œechnicalŸAnalysis – Focuses on price charts and patterns. This book primarily explores technical analysis schools and theories, emphasizing short- to intermediate-term trading rather than long-term investing. Therefore, this book will discuss the schools and theories that are most closely aligned with technical analysis - in other words, the analysis of price charts. 9

The schools of trading as we know them today are an accumulation of knowledge, facts, and theories through the years. The most influential theories in trading, regarding the technical analysis of speculating future price movements can be listed as follows: Charles Dow composed a set of rules that set the main stage for the modern study of technical analysis. His theory covered topics such as trends and their types, as well as the significance of indices and volume R.N. Elliot theorized that market indices move in a cyclical and fractal nature, in accordance to Dow’s theory. His contributions proved useful as this theory is actively the base of many trading systems today Gann’s theory was the first to emphasize and articulate the relationship between price, patterns, and time in a defined way with multiple tools to help in this form of technical analysis. Richard Wyckoff expanded the study of technical analysis with his contributions. These included Wyckoff’s rules, laws, and method which lay the foundation of some modern schools of trading. The Most Significant Theories in Trading §¥ Dow Th¦ory ·¥ E²²iot Wav¦ Th¦ory Ã¥ Gann Th¦ory Ð¥ WyÎkoff’s Th¦ory 10

B. Schools in Trading In trading, different "schools of thought" guide how traders analyze and approach the markets. These schools can be broadly categorized based on their methodologies and philosophies. The Classical School in trading contains the general rules and oldest principles of technical analysis, it is a widely agreed upon point of view in terms of understanding the financial markets. The Classical School combines ideas from] M Dow’s TheorX M Elliot’s ^ave TheorX M The Basics of Technical Analysis Tools To provide the trader with a simple foundation to base his trading activities. The Classical School combines ideas from] M Fibonacci’s Theoriew M Dow’s TheorX M The Basics of Technical Analysis Tools To provide the trader with a simple foundation to base his trading activities. The School of Harmonics and Fibonacci concepts in trading cover specific chart patterns, bound by Fibonacci numbers and ratios, as well as the use of fibonacci numbers, ratios, and levels to predict price moves. ¶³ Class´cal School ³ Áarmon´cs ÃÃ

The School of Price Action trading and Candlestick theory focus on understanding a “clean” chart without any extra indicators or forms of analysis. The School of Volume Price Analysis combines price action with volume, solely focusing on these two factors for a basis on speculating future price moves. The School of Smart Money Concept, is the belief that analyzing “smart money”, or funds allocated by large institutions and banks for example, can provide a good basis for your tardes. jh Voiume Price Anaiysis ph Price Action „h †mart Money Concept The Classical School combines ideas from  Dow’s Theor™  Candlestick Theor™  The Basics of Technical Analysis Tools To provide the trader with a simple foundation to base his trading activities. The Classical School combines ideas from  Dow’s Theor™  Âyckoff’s Theorie´  The Basics of Technical Analysis Tools To provide the trader with a simple foundation to base his trading activities. The SMC Schools introduces an entirely new method of trading, therefor it does not build upon previous theories other than some ideas from Dow’s theory. 12

Difference Between School of Thoughts and Theories Narrow, focusing on a specific concept within a school of thought. Choosing a broad trading philosophy, such as whether to rely on price charts, financial statements, or statistical models. Provides detailed insights or models for market behavior. Theories are tested and refined but follow set principles. Developing specific trading strategies, such as using moving averages, price patterns, or volume-based indicators. General, covering multiple theories and methods. Guides overall trading strategy and mindset. More adaptable, traders can combine different schools. SCHOOLS OF THOUGHT THEORIES 13

Part - 2 Classical School and Theories

1. Classic Technical School

Technical analysis is based on various schools of thought and theories that help traders interpret market behavior. The classical technical school: is built on foundational market theories developed by early pioneers. Some of the most influential theories: Classic Technical School Key Components €‚ Cƒart Patterns – Visual formations indicating trend continuation or reversal| p‚ Support & Resistance – Key levels where price reactsb preventing further movement| a‚ Indicators & Oscillators – Tools like Moving Averagesb RSb and MACY help confirm trends| X‚ Trend Analysis – dentifying uptrendsb downtrendsb and sideways movements.
 €‚ Dow ThÂor¬: Explains trends| p‚ Elliott Wav ThÂor¬: Focuses on wave cycles| a‚ Gann ThÂor¬: Uses geometric and time-based analysis| X‚ W¬cšoff MÂthod: Studies smart money movements. 1Ð

 Reversal Patterns (Indicate Trend Reversals) Head & Shoulders – Bearish reversal pattern forming after an uptrend.
 Inverse Head & Shoulders – Bullish reversal pattern forming after a downtrend. Double Top – Price hits a resistance level twice before falling (bearish). Double Botto – Price bounces off support twice before rising (bullish). Bearish Head & Shoulders Bearish Double Top Bullish Head & Shoulders Bullish Double Bottom A. Chart Patterns Chart patterns are visual formations on price charts that indicate potential trend continuation or reversals. They help traders make informed decisions based on past price behavior 17

 Contination Patterns (Indicate Trend Contination) Triangles (Ascending, Descending, Symmetrical) – Consolidation before trend continuation.
 Flags & Pennants – Short-term pauses before price resumes its trend. A bullish pattern that signals further upward moement. Bullish Flag Bearish Flag Ascending Triangles Descending Triangles 18

B. Support & Resistance Fundamental concepts in technical analysis that help traders identify potential price reversal zones, breakout points, and key trading opportunities. 1. Support A price level where demand (buying pressure) is strong enough to prevent further decline. When the price reaches support, buyers step in, pushing prices back up. 2.. Resistance A price level where supply (selling pressure) is strong enough to prevent further increase. When price approaches resistance, sellers enter the market, pushing prices down. Support Resistance 19

C. Indicators Mathematical tools used to analyze price movements, trends, momentum, and market volatility. They help traders understand market behavior and potential price direction. :; Trend Indicators (Identify Market Direction) Trend indicators help determine whether an asset is in an uptrend, downtrend, or mo<ing sideways. Moving Averages (SMA & EMA{ … Simple Moving Average (SMA): Calculates the a<erage price o<er a set period_ … Exponential Moving Average (EMA): Places more emphasis on recent prices, ma|ing it more responsi<e to mar|et changes. 20

 Moentu Indicators (Measure Speed of Price Moveents) Momentum indicators analyze the strength and speed o price movements. HSI (Helative Strength IndexF G Ranges between 0-100 and measures price momentumC G Above 70: Indicates strong buying pressureC G Below 30: Indicates strong selling pressure. Stochastic Oscillatos G Compares the closing price o an asset to its price range over a set periodC G Indicates potential overbought or oversold conditions. 21

fl Volatility Indicators (Measure Market Strength & Price Fluctuations) Volatility indicators assess market strength and price ffiariability. BollingeI BandH D Consist of an upper band, middle band, and lower bandO D Bands expand when ffiolatility is high and contract when ffiolatility is low. ATR (AveIage TIve Ranges D Measures market ffiolatility by calculating the affierage range between high and low prices offier a period. 22

D. Trend Analysis The process of identifying and evaluating market direction over time. It helps in understanding price movements and predicting future trends. Uptrend (Bullish Market5 4 Prices form higher highs and higher 9ows8 4 Indicates strong buying momentum6 Downtrend (Bearish Market5 4 Prices form 9ower highs and 9ower 9ows8 4 Indicates strong se99ing momentum6 Sideways Trend (Range-Bound Market5 4 Prices f9uctuate within a horizonta9 range8 4 Indicates market indecision or conso9idation6 23

A Dow Theory

(The DJIA Index) - Monthly Cart A journalist, economist, and co-founder of The Wall Street Journal. He is best known for developing the Dow Theory. He passed away before formalizing it, but his followers built on his ideas. “A person who cannot make up their mind to act on a movement until it is fairly started will not be in at all until the danger point is reached” Charles
 Dow (1851–1902) Dow Theory: A framework for analyzing market trends based on price action. Stock Market Indexes: Created the Dow Jones Industrial Average and Dow Jones Transportation Average to track market performance. Trends & Market Phases: Defined primary, secondary, and minor trends in markets. about Key Contributions: Dow Theory 25

Dow Theory The Core Underlying Principles behind this Theory +$ A Co%bined View: Everyone's view is in the market and their combined views are more powerful than any individual view. That being the case, the stock market itself tends to act as the leading indicator of what lies ahead for the economy and business. 26 A framework for understanding market movements and trends. It is the foundation of technical analysis and focuses on the behavior of the stock market as a whole. Traders use Dow Theory to identify long-term trends, confirm market reversals, and understand market psychology. It's one of the most foundational principles in technical analysis

27 Dow's work laid the foundation for technical analysis, making it essential for traders to understand the six basic tenets of Dow Theory. -1 Rela2ed Sec2ors .us2 Confirm Each O2her: That the trend in the Dow Industrial Index must be confirmed by a similar trend in the Dow Transports Index. Any possible change in the trend from a primary bull market to a primary bear market (or vice versa) must be confirmed by both indexes. f1 The Nature of Trends: The market has three movements: the primary trend (overall direction), secondary reactions (temporary counter-moves that may signal trend changes), and daily fluctuations (short-term price changes gith little impact). Primary Trend Secondary Trend

28 The 6 Main Components of Dow Theory: The Dow Theory attempts to identify the primary trend a market is in. It is comprised of three primary trends, each made up of secondary and minor trends.  1. 2. 3. The Market Discounts Everything There Are Three Primary Kinds of Market Trends Primary Trends Have 3 Phases 4 5 6 . Indices Must Confirm Each Other . Volume Must Confirm the Trend . Trends Persist Until a Clear Reversal Occurs

29 1. The Market Discounts Everything DHw TheHr+'s first principle states that stHck and index prices reflect all available infHrmatiHn, including* G Investor Senti#en" G Econo#ic D;t: G Co#p;ny Announce#ents Dow Theory analyzes market trends using index movements, helping investors spot trends and make decisions, like buying fairly valued stocks in an uptrend. It's based on technical analysis but can also consider fundamental factors, making it a key tool for understanding market trends and price behavior. Core Principle: All information—past, present, and anticipated—is reflected in stock and index prices. This aligns with technical analysis, focusing on price movements rather than individual details like balance sheets.

30 2. Three Kinds of Market Trends Markets move in a series of peaks (highs) and troughs (lows) rather than a straight line. Trend T/pe. Da Primary Treng € The major markeb direcbion lasbing 1-3 yearsZ € Remains in effecb Enbil a confirmed reversal (e.g., price drops below a prior broEgh in an Epbrend)Z € In this example shown on the ri[ht, the primary trend is upward. Notice how it doesnt move strai[ht upward but has corrections within. ©a Seªondary Treng € Intešmedi’te tšend l’sting 3 weeks to 3 months, moving ’g’inst the pšim’šy tšend. •cts ’s ’ coššection to the pšim’šy tšend (Highlighted in šed)Z € Retš’ces 1/3 to /3 of the pšim’šy tšend’s movementZ € Moše vol’tile th’n the pšim’šy tšend. ßa Úinor Treng € Shošt-tešm movements l’sting less th’n 3 weeks, often coššective within ’ second’šy tšend. (•ll these ex’mples ’še t’ken fšom the DJ•I.´ Primary Trând Primary Trând Sâcondary Trânds Primary Trând Minor Trânds Sâcondary Trând

31 3. The Three Phases of Primary Trends Dow Theory outlines three phases in every primary trend, applicable to both bull markets (upward trends) and bear markets (downward trends). Bull Market Pha0e/ CP AccumulatioS PhasR m Marks Qhe sQarQ of an upDard Qrend; informed invesQors begin buying aQ NoD pricesM m Occurs afQer a doDnQrend Dhen mosQ bad neDs is priced in, NimiQing doDnside riskM m CharacQerized by price consoNidaQion and fNaQQening, foNNoDed by graduaN upDard movemenQ. The first suggests that the trend is shifting and is used to trigger accumulation. higher low Excerpts were taken from the Nasdaq Index on Trading View

32 3 Public Participati0ffl Phasffi / The longes phase wih he larges price movemen / Posiive senimen reurns as economic condiions improve (eg, earnings growh) / More invesors join, pushing prices higher; rend raders and echnical analyss ener. a ExcXss Phasffi / Marke senimen becomes overly opimisic ("irraional exuberance") / Smar invesors sar selling heir posiions as lae enrans buy a inflaed prices / Signs of weakness (eg, weaker upward moves) may indicae an approaching downward rend. The Public Participatiob Phase The Excess Phase

33 /* Public Participati+n Phas ( The longes and mos significan downwa)d movemen occu)s ( Economic condiions wo)sen negaive senimen )ises and selling accele)aes ( T)end )ade)s and echnical analyss exi o) ake sho) posiions. Y* Panic Phas ( Ma)ked by )apid sell-offs and ex)eme negaive senimen ( Weak economic and ma)ke oulooks d)ive panic selling ofen f)om lae en)ans ( 0es he sage fo) he nex accumulaion phase of a bull ma)ke. Bear Market PZa\e[ ‘* Distributi+n Phas ( Info)med inveso)s sell ino an ove)bough ma)ke ma)king he sa) of a downwa)d )end ( 0enimen )emains opimisic bu selling p)essu)e inc)eases leading o p)ice flaening and evenual declines. Key In\igZt: The phases in both bull and bear markets reflect investor behavior cycles, with each trend culminating in a reversal that starts the ne’t cycle

34 4. Market Indices Must Confirm Each Other A new primary market trend (bull or bear) is only confirmed when multiple indexes, such as the Dow Industrials and Rail Averages, show aligned movements, reflecting consistent business conditions in the economy. Indices must confirm e`ch other to sign`l ` m`jor trend revers`l (bull to be`r or vice vers`)_ v Trend Confirmation: woth the Dow Industri`l `nd R`il Aver`ges must move in the s`me direction to confirm ` new trend; if one goes up `nd the other goes down, ` new trend c`nnot be confirmed_ v Market Reflection: Prim`ry trends show the over`ll he`lth of the economy: rising m`rkets sign`l good conditions, while f`lling m`rkets indic`te poor conditions_ v Index Disparity: Conflicting sign`ls from indexes indic`te uncle`r trends `nd inconsistent business conditions_ v Confirmation Timing: Multiple indexes must show simil`r sign`ls within ` short period to confirm ` new prim`ry trend_ v Aligned Indexes: Agreement between indexes signifies th`t business conditions `re moving in the direction of the trend.

35 Volume serves as a secondary indicator to confirm price movements, with rising volume in the direction of the trend indicating strength and decreasing volume or contrary volume signaling potential weakness in the trend. 5. Volume Must Confirm The Trend r Voluse Dynasics: Volume should increKse when prices move in the direction of the trend. Volume should decreKse during price movements KgKinst the trendJ r Uptrend Exasple: Rising volume during price increKses indicKtes strong upwKrd momentum. Low volume during price corrections suggests confidence in the uptrendJ r Downtrend Exasple: IncreKsed volume on down dKys signKls growing selling pressure. WeKk volume during rKllies indicKtes limited confidence in K reversKlJ r Trend Strength vs. Weakness: Strong volume Klignment with the trend confirms its strength. ContrKdictory volume (e.g., weKk buying in Kn uptrend) signKls potentiKl weKknessJ r Trading Isplication: Once volume confirms K trend, the mKjority of mKrket Kctivity should Klign with thKt trend

36 6. Trend Exists Until Clear Reversal Occurs A trend will continue until it shows signs of reversal, with Dow emphasizing the importance of waiting for confirmation. f Purpose of Trend Identification: To align trades with the market’s direction and avoid trading against the trendH f Trend Transitions: Markets move between uptrends and downtrendsg making it crucial to identify these shifts accuratelyH f Primary vs. Secondary Trends: Secondary trends are temporary movements against the primary trend and do not signal a reversalH f Avoid Premature Reversal Assumptions: Acting on a perceived reversal without sufficient evidence risks trading against the primary trendH f General Rule for Traders: Trade with the trendg not against it. Iait for clear and substantial evidence before concluding a trend has reversed.

B. Elliot wave

wave A wave 1 wave 3 wave 5 wave B wave 4 wave 2 wave C (1) (2) (3) (4) (5) (6) (7) (8) American accountant and stock market analyst who developed the Elliott Wave Theory in the 1930s. He observed that financial markets move in repetitive cycles influenced by investor psychology and crowd behavior. “The stock market is a fractal pattern of human behavior, which is often repetitive” Ralph Nelson Elliott (1871–1948) Elliott Wave Theory: A method for predicting market trends using wave patterns. Market Psychology: Proposed that price movements reflect human emotions in cycles. "The Wave Principle" (1938) His book explaining the theory. about Key Contributions: Elliott Wave Theory 38

Elliott Wave Theory 39 It suggests that market prices move in repetitive cycles or waves, driven by investor psychology. Traders use Elliott Wave to predict future market movements by identifying where the market is within a specific wave cycle. It’s based on the idea that market psychology repeats itself in predictable patterns. Topics to Explore: Core Structure of Elliott Wave Theory
 Elliott Wave Cycle (Full Market Cycle)
 Fractal Nature of Waves
 Elliott Wave Rules & Guidelines
 Fibonacci and Elliott Waves
 Practical Application: Trading with Elliott Waves Elliott Wave Theory, developed by Ralph Nelson Elliott, is a powerful tool for analyzing market trends. It suggests that prices move in repeating wave patterns influenced by investor psychology. By understanding these waves, traders can predict market movements and improve their decisionmaking.

40 A. Impulse Waves (5 Waves) – Trend Direction Impulse waves move in the direction of the dominant trend. They consist of five waves (1-2-3-4-5): B. Corrective Waves (3 Waves) – Against the Trend Once the impulse waves complete, a correction follows, consisting of three waves (A-B-C): A. Core Structure of Elliott Wave Theory The Elliott Wave structure consists of two main phases: wave 1 wave 3 wave 4 wave 5 wave 2 (1) (2) (3) (4) (5) wave B wave A wave C (A) (B) (C) Corrective
 (Lettered)
 Phase Motive 
 (Numbered)
 Phase

41 Key Rule: Wave 3 is never the shortest wave. Corrective Waves : Wave A – The first movement against the main trend. Wave B – A partial retracement of Wave A. Wave C – The final move in the correction, often equal to or longer than Wave A. Corrective waves can take different shapes, including zigzags, flats, and triangles. Impulse Waves: Wave 1 – The initial price movement in the trend direction. It often starts after a major correction. Wave 2 – A retracement or pullback of Wave 1. It does not retrace more than 100% of Wave 1. Wave 3 – The strongest wave in an uptrend/downtrend. It has the most trading volume and price movement. Wave 4 – A corrective pullback, usually weaker than Wave 2. It should not overlap with Wave 1. Wave 5 – The final move in the trend direction. It often has lower momentum than Wave 3.

42 The complete Elliott Wave Cycle consists of 8 waves (5 impulse waves + 3 corrective waves): Bullish Market Cycle: 1 → 2 → 3 → 4 → 5 A → B → C (Uptrend)
 (Downtrend Correction) The Figure on the rigth shows a Bullish Flat Elliot Wave Example - See pg. 50 for reference. The Figure on the rigth shows a Bearish Flat Elliot Wave Example - See pg. 50 for reference. Bearish Market Cycle:
 1 → 2 → 3 → 4 → 5 A → B → C (Downtrend)
 (Uptrend Correction) “These cycles repeat over and over in the market” B. Elliott Wave Cycle (Full Market Cycle) (2) (1) (3) (4) (5) (5) (B) (C ) (A ) (4) (3) (2) (1) (A) (B) (C)

43 Why Fractal Nature of Elliott is Useful ? because it helps you see trends within trends and analyze different time frames easily. Why Does This Matter for You? – You won’t get lost in short-term noise because you’ll know where the market is in the larger cycle. – You can zoom into smaller waves to find the best entry points and zoom out to confirm the bigger trend. – If a smaller wave breaks structure, you can exit early and avoid bigger losses. – Whether you're scalping, swing trading, or investing long-term, this concept applies. Bigger Picture Awareness Better Entries & Exits Stronger Risk Management Works for Any Trading Style Think of: What is it ? A fractal is a pattern that repeats itself on different scales—small parts look similar to the whole. C. Fractal Nature A tree – A branch looks like a mini version of the whole tree. Clouds, snowflakes, coastlines All have repeating patterns at different sizes.

44 Main Rules (MUST be followe)
9/ 8ave 2 neve1 1et1aces mo1e than 100% of 8ave 1/ 7/ 8ave 3 is neve1 the sho1test impulse wave/ 0/ 8ave 4 does not ove1lap 8ave 1 (except in a diagonal patte1n). never retraces more than 100% of :ave 1 is never the shortest wave 4 does not overlap :ave 1 (0) (1) (2) (4) (5) (3) Guidelines (Tend to happen, but not alwass)
  Wave 5 is often weaker than Wave 3/   Corrections (A-«-C) often end near Fibonacci levels/   If Wave 3 is extremel¡ long, Wave 5 ma¡ be weak/   Wave 4 usuall¡ retraces 38.2% of Wave 3. If these rules are broken, the Elliott :ave count must be adjusted Elliott Wave patterns must follow strict rules: D. Elliott Wave Rules and Guidelines :ave 4 usually retraces 38.2% of :ave 3. If :ave 3 is extremely long :ave 5 may be weak Corrections (A-B-C) often end near Fibonacci levels.

45 Commo- Fibo-acci Relatio-shipsffl , ffave 2 = Retraces 50% or 618% of ffave 1 , ffave 3 = Ofte- exte-ds to 1618x the le-gth of ffave 1 , ffave 4 = Retraces 382% or 50% of ffave 3 , ffave 5 = Ca- be equal to ffave 1 or 1618x ffave 1 , ffave C = Ofte- equal to ffave A or 1618x ffave A. Fibo-acci levels are used to fi-d e-try/exit poi-ts i- the market Elliott ffaves are stro-gly li-ked to Fibo-acci ratios Fibo-acci -umbers help predict wave le-gths: E. Fibonacci and Elliott Waves

46 Corrective waves take various forms: #) $igzag (A-B-C, 5-3-5 structure) A zigzag is a three-wave corrective pattern (A-B-C) that moves against the primary trend. It follows a 5-3-5 structure, where: Wave A consists of five sub-waves (impulse). Wave B consists of three sub-waves (corrective). Wave C consists of five sub-waves (impulse). Zigzags typically appear in corrections and represent sharp counter trend moves. Figures [X] and [Y] illustrate a bull market zigzag correction, whereas a bear market rally example is shown in Figures [Z] and [W]. A key characteristic of a zigzag is that Wave B does not retrace much of Wave A, and Wave C extends beyond the end of Wave A, confirming the corrective nature of the pattern. A less common variation is the double zigzag, which appears in larger corrective phases. As shown in Figure [*], this pattern consists of two separate 5-3-5 zigzag formations, connected by a small a-b-c linking wave.

47 Zigzag (A-B-C, 5-3-5 structure) A B C A B C figure x bull market zig zag figure z bull market zig zag figure w bull market zig zag figure y bull market zig zag B A C B A C

48 Flat Correction (A-B-C, 3-3-5 structure)) figure x bull market flat figure z bull market flat A C B B A C A flat iN a three-wave corrective pattern (A-B-C) that moveN againNt the primary trendf It followN a P-P-5 Ntructure, whereO M Wave A conNiNtN of three Nub-waveN (corrective)e M Wave B conNiNtN of three Nub-waveN (corrective)e M Wave C conNiNtN of five Nub-waveN (impulNe). Figures [Z] and [W] FlatN generally indicate market conNolidation rather than a Nharp counter-trend movementf FigureN [Z] and [W] illuNtrate a bull market flat correction, whereaN a bear market example iN Nhown in FigureN [X] and [W]. figure D bear market flat figure w bear market flat A C B A B C

49 Flat Correction (A-B-C, 3-3-5 structure)) figure s bear market flat figure k bear market flat figure m bear market flat figure f bear market flat B A C B A C A C B A C B Figure [S]And[F] A key characteriBtic of a flat iB that Wave B retraceB moBt or all of Wave A, and Wave C endB near or Blightly beyond Wave A, unlike a zigzag, where Wave C moveB well beyond Wave AO A leBB common variation iB the expanded flat, which appearB in larger corrective phaBeB. AB Bhown in Figure [S*And[F*, thiB pattern conBiBtB ofA ) Wave B exceeding the top of Wave AN ) Wave C dropping below the bottom of Wave AO