The 3 Cardinal Rules
As you may have guessed, the key in using the Elliott Wave Theory in trading is all about being able to correctly identify waves.
By developing the right eye in recognizing what wave the
market is in, you will be able to find out which side of the market to trade
on, long or short.
There are three cardinal cannot-be-broken rules in labelling
waves.
- Rule Number 1: Wave 3 can NEVER be the shortest impulse wave
- Rule Number 2: Wave 2 can NEVER go beyond the start of Wave 1
- Rule
Number 3: Wave 4 can NEVER cross in the same price area as Wave 1
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