Professional Documents
Culture Documents
ElliottWaveManual+G P@FB
ElliottWaveManual+G P@FB
Trading any financial market involves risk. This report and all and any of its contents are neither a solicitation nor an offer
to Buy/Sell any financial market.
The contents of this material are for general information and educational purposes only [contents shall also mean the
website http://www.elliottwavedna.com or http://www.elliottwavelab.com or any website (“the sites”) the content is hosted
on, and any email correspondence or newsletters or postings related to such website]. Every effort has been made to
accurately represent this product and its potential. There is no guarantee that you will earn any money using the
techniques, ideas and software in these materials. Examples in these materials are not to be interpreted as a promise or
guarantee of earnings. Earning potential is entirely dependent on the person using the product, ideas and techniques. We
do not purport this to be a “get rich scheme.”
Although every attempt has been made to assure accuracy, we do not give any express or implied warranty as to its
accuracy. W e do not accept any liability for error or omission. Examples are provided for illustrative purposes only and
should not be construed as investment advice or strategy.
No representation is being made that any account or trader will or is likely to achieve profits or losses similar to those
discussed in this report or on http://www.elliottwavedna.com or on the sites. Past performance is not indicative of future
results.
By purchasing any content, subscribing to our mailing list or using the website or contents of the website or materials
provided herewith, you will be deemed to have accepted these terms and conditions in full as appear also on our site, as
do our full earnings disclaimer and privacy policy and CFTC disclaimer and rule 4.41 to be read here with. So too, all the
materials contained within this course, including this manual, whether they appear on our domain(s) or are in physical
form, are protected by copyright. "W arning: The unauthorized reproduction or distribution of this copyrighted work is illegal.
Criminal copyright infringement, including infringement without monetary gain, is investigated by the authorities and is
punishable with imprisonment and a fine." We reserve all our rights in this regard.
Alaziac Trading CC, in association with http://www.elliottwavedna.com, the sites, content, and its representatives do not
and cannot give investment advice or invite customers or readers to engage in investments through this course or any
part of it.
The information provided in this content is not intended for distribution to, or use by any person or entity in any jurisdiction
or country where such distribution or use would be contrary to law or regulation or which would subject us to any
registration requirement within such jurisdiction or country.
Hypothetical performance results have many inherent limitations, some of which are mentioned below. No representation
is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are
frequently sharp differences between hypothetical performance results and actual results subsequently achieved by any
particular trading program and method.
One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of
hindsight. In addition, hypothetical trading does not involve financial risk and no hypothetical trading record can
completely account for the impact of financial risk in actual trading.
For example, the ability to withstand losses or to adhere to a particular trading program or system in spite of the trading
losses are material points that can also adversely affect trading results. There are numerous other factors related to the
market in general or to the implementation of any specific trading program, which cannot be fully accounted for in the
preparation of hypothetical performance results. All of which can adversely affect actual trading results.
We reserve the right to change the set terms and conditions without notice. You can check for updates to this
disclaimer at any time by visiting http://www.elliottwavedna.com
Governing law: this policy and the use of this report / course / DVDs / eBook, provided in any form, and any content on the
website are governed by the laws of the Republic of South Africa. Further details on this are found under the Terms and
Conditions on our site. Please ensure you read and agree with all Terms and Conditions as set out on our site before
using any of the materials. Your use and reliance on the materials is based on your acceptance of such Terms and
Conditions and policies as appear on the site.
Nicola Delic Elliott Wave DNA
The best way to learn any strategy is to start at the beginning! My strategy is built
around the Elliott Wave Theory: That’s a near century old and proven strategy
developed by the great Ralph Nelson Elliott. "R.N." as he was called, began his career
as an accountant and before his big discovery he published two books: Tea Room &
Cafeteria Management and The Future of Latin America.
After his visit to Central America he contracted an illness that forced him to retire from
accounting. He decided to spend the rest of his life studying the stock market. He
started by analyzing huge amounts of market data. He examined 75 years of historical
data from the DOW Index – from yearly Images down to half-hour fluctuations.
His discovery was amazing. He managed to crack the market code without modern-day
technology! You need to keep in mind that back then you needed to print charts by
hand, and you didn’t have access to any piece of code that could analyze the market.
So everything R.N. Elliott did was manual!
In all of the charts he analyzed there were certain patterns that repeated themselves
and those same patterns repeated on a larger scale also. Today we know these
patterns as “Elliott Waves.”
In 1946 Elliott published his final work, Nature’s Law – The Secret of the Universe,
where he explained how the market works.
Image 1
www.elliottwavedna.com 2
Nicola Delic Elliott Wave DNA
Elliott discovered that the market only has two phases that repeat, and you can see
them on every single timeframe and on every single instrument. You can view a good
illustration of these phases in Image 1.
The first phase is called the Motive Phase. This is the part of the cycle that moves in the
direction of the larger trend. You will notice on Image 1 that there are five waves labeled
with numbers from 1 through 5. The second phase is called the Corrective Phase. This
part of the cycle represents pullbacks that happen in the market. Within the corrective
phase we find just three waves; labeled with letters A, B, and C.
We know that the patterns repeat and repeat, so they link to each other and build the
same pattern on the larger scale. The image below depicts an example of this.
Image 2
Now to understand this better, imagine that Image 1 is a move found on the 5 minute
chart and that Image 2 represents the movements of the pair on the 15 minute chart.
We can advance now to see how these patterns would look on the largest scale.
www.elliottwavedna.com 3
Nicola Delic Elliott Wave DNA
Image 3
In Image 3 we can see that we have many waves, however all need only to be counted
from 1 to 5 and from A to C. True, you’ll need to learn few patterns and rules along the
way, but I promise it’s not that complicated at all.
Let’s move to covering the first phase in the Elliott Wave Theory, The Motive Phase.
www.elliottwavedna.com 4
Nicola Delic Elliott Wave DNA
Motive Phase
The Motive Phase is the first group of patterns we need to learn in our quest to build a
perfect trading strategy. In this group we have just four different patterns to learn and
most of the patterns a have few things in common.
Each pattern from this group will have a five-wave structure, and you can always spot
them as they move in the direction of the larger trend. To make it easy, we are going to
label each wave from this group with numbers from 1 through 5, just like on Image 1.
Since the market is never going to move in just one direction, we are going to see
waves 1, 3 and 5 in the direction of the larger trend and waves 2 and 4 in the opposite
direction. This is going to be same for all patterns in the Motive Phase group.
For each of the patterns we only need to learn three rules. The rules are going to be the
same for most of them, and we will cover this part shortly.
One thing is certain, after the end of the Motive Pattern the market is going to start a
Corrective Phase. So after we finish this group you are going to know exactly when the
trend is going to change.
Image 4
We will separate the four patterns from left to right in Image 4 above (Impulsive Waves,
Extended Waves, Leading Diagonals, and Ending Diagonals respectively) into three
groups:
1. Impulsive
2. Extended
3. Diagonals
www.elliottwavedna.com 5
Nicola Delic Elliott Wave DNA
Image 5
From the five-wave structure we have inside of the Impulsive Wave, waves 1, 3, and 5
are trend waves and move in a direction of the larger trend. Waves 2 and 4 are
corrective and represent short-term pullbacks in the larger trend.
For each leg of the Impulsive Wave we will have the exact number of sub-waves you
can spot on the smaller timeframes. Inside waves 1, 3, and 5 we are going to see
smaller Motive Patterns (another five-wave structure) and in waves 2 and 4 we are
going to see smaller corrections (another three-wave structure). Look at Image 5 above
to get a better understanding of how that would look on a chart.
Now to be sure that you are labeling Impulsive Waves correctly, you need to remember
and check three simple rules.
Impulsive Wave Rules
Rule #1 - Wave 2 never falls below the starting point of Wave 1
Rule #2 - Wave 3 is often the longest wave, but never the shortest of the waves
1-3-5. Wave 3 can be shorter than wave 1 or wave 5, but can’t be shorter than
both.
Rule #3 - Wave 4 can’t enter Wave 2 territory
www.elliottwavedna.com 6
Nicola Delic Elliott Wave DNA
Tip: You are usually going to see Impulsive Wave patterns in the direction of the larger
trend, and you can check for wave 5 after you see some strong and sharp movements,
but to be sure you are on the right track make sure all three rules are in place.
:
Image 6: Impulsive Wave Example in a Bullish Trend
On the daily chart of the GBP/USD pair we can observe a strong upward movement
from 1.5607 towards 1.9138. This move has our five-wave structure and appears as an
Impulsive Pattern. The main three rules were all respected, and wave 2 (2w) held above
the start of wave 1. Wave 3 (3w) is not the shortest wave (In fact, wave 3 is the longest
wave here.) and wave 4 held above wave 2 territory.
www.elliottwavedna.com 7
Nicola Delic Elliott Wave DNA
The main trend on this EUR/USD chart in Image 7 is down, and again we see the five-
wave structure from the high at 1.1317 towards 1.1199. Again, we are going to check
the rules: wave 2 held below the start of wave 1, wave 3 is the strongest wave, and
wave 4 held below the territory of wave 2.
Now look at these two examples again and see what market did after wave 5
completed! The market pulled back in what looks like 3 corrective patterns. Until we
cover corrections I want you just to watch for the 3 corrective patterns against the trend
after we complete the Motive Phase.
www.elliottwavedna.com 8
Nicola Delic Elliott Wave DNA
Image 8
Extended Waves appear due to high volatility in the market and you can expect to see
extended waves frequently on your charts especially in the Forex and Stock markets.
You need to remember that only one wave from waves 1, 3, and 5 can become
extended, so don’t try to label two or all three waves as extension. Usually wave 3 has
the best chance to become extended. Every leg of the Extended Waves has the exact
number of sub-waves you can spot on the smaller timeframes. Within waves 1, 3 and 5,
we are going to see a smaller Motive Pattern (another five-wave structure) and within
waves 2 and 4, we are going to see smaller corrections (a three-wave structure).
On completion of the nine-wave structure we would have a complete Motive Pattern, so
we can then expect a pullback that will take the shape of a correction (three wave
structure).
Extended Wave Rules
Rule #1 - Wave 2 never falls below the starting point of wave 1.
Rule #2 - Wave 3 is often the longest wave, but never the shortest of the waves
1-3, and 5. Wave 3 can be shorter than wave 1 or wave 5, but can’t be shorter
than both.
Rule #3 - Wave 4 can’t enter wave 2 territory.
www.elliottwavedna.com 9
Nicola Delic Elliott Wave DNA
Since in extended wave patterns you have 9 waves, and you now have two Motive
Patterns, you would need to check the three rules above in the main wave 5 and inside
wave 5 of the extension.
Tip: The strongest volatility in the market occurs after important fundamental events.
Usually after important news we’ll see strong spikes in the market and this is when you
can expect to see extended waves.
:
Image 9: Extended Wave Example in a Bullish Trend
On this daily chart of SILVER we can see a strong upward trend with a Motive pattern.
On closer inspection we can see that we have 9 sub-waves in total, so after checking all
the rules, we determined an extended wave 3 and labeled these waves from i to v.
www.elliottwavedna.com 10
Nicola Delic Elliott Wave DNA
On this chart of AUD/JPY we have a clean and nice downtrend from 104.43. We will
count wave 1 as the extended wave, but wave 3 is still the largest wave of waves 1,3,5,
and that makes the Impulsive Pattern valid (wave 3 can be shorter than wave 1 or wave
5 but can’t be shorter than both waves 1 and 5).
www.elliottwavedna.com 11
Nicola Delic Elliott Wave DNA
Image 11
What separates Leading Diagonals from Impulsive Waves is wave 4. In the Leading
Diagonals pattern, wave 4 enters the territory of wave 2. This occurs because during
wave 1 or A, people are still optimistic about the previous trend and they try to re-enter
that market.
The sub-structure is the same as we have in the impulsive pattern. Waves 1, 3, and 5
subdivide further into a smaller five-wave pattern, and waves 2 and 4 subdivide into
smaller corrections. This pattern you can see on Image 11 – on the right hand pattern.
Once we complete a Leading Diagonal structure we would have a complete Motive
Pattern, and we can expect a pullback that will take the shape of a correction (three-
wave structure). After a Leading Diagonal there is usually a deeper pullback expected.
www.elliottwavedna.com 12
Nicola Delic Elliott Wave DNA
Tip: Since we know that LD patterns appear only inside of wave 1 or A, and we know
that wave 1 starts when the trend is changing, we can expect to see this type of move in
the opposite direction of the trend or when the trend ends.
:
Image 12: Leading Diagonal Wave Example in a Bullish Trend
In this image above, we see that after a strong decline that lasts for a couple of weeks,
the GBP/USD trend appears to be changing. We determine 5 waves from the bottom
low, however we note that wave 4 has entered the territory of wave 2 (at the red line),
so we can’t determine these as Impulsive or Extended waves. Since we can determine
this as a larger wave 1, we can refer to the pattern as a Leading Diagonal pattern.
But again, don’t forget that wave 2 needs to remain above the start of wave 1, wave 3
can’t be the shortest wave, and wave 4 must end above the starting point of wave 2. We
know that after a 5 wave upwards move we should expect 3 waves down, and while the
price holds above the start of wave 1 we can continue to watch for more bullish
movements.
www.elliottwavedna.com 13
Nicola Delic Elliott Wave DNA
Image 13
As with the LD we have a five-wave structure that moves in a direction of the market,
and the 4th wave that needs to test territory of wave 2. The biggest difference between
the Ending Diagonal and the rest of the Motive Patterns is the number of required sub-
waves.
Inside each leg of the Ending Diagonal: waves 1, 2, 3, 4 and 5 we have a smaller
correction (a three wave structure), so we are going to have five corrections in total in a
direction of the larger trend.
Once we complete the Leading Diagonal structure we would complete the Motive
Pattern, so we can expect a pullback that will take the form of a correction (a three wave
structure).
Ending Diagonal Rules
Rule #1 - Wave 2 never falls below the starting point of Wave 1.
Rule #2 - Wave 3 is often the longest wave, but never the shortest of the waves
1-3-5. Wave 3 can be shorter than wave 1 or wave 5, but can’t be shorter than
both.
Rule #3 - Wave 4 must end above the starting point of Wave 2.
www.elliottwavedna.com 14
Nicola Delic Elliott Wave DNA
Tip: The easiest way to spot the Ending Diagonal on a blank chart would be to look out
for a Wedge Pattern. Wedge Patterns appear at the ending stages of the trend, and
usually that’s where you can spot 5 waves with 3 sub-waves within!
:
Image 14: Ending Diagonal Wave Example in a Bullish Trend
On the chart above of the EUR/USD pair we can observe strong and sharp bullish
movements that started during the first half of 2015, but right before the drop there was
a contest going on between buyers and sellers. If you count how many waves we have
from the end of wave 4 you’ll see a five wave structure [labeled (i) to (v)].
In the chart you can clearly see that wave (i) is the strongest wave, but since wave (iii)
is larger than wave (iii) we say that rule 2 has been complied with. But since the price
movements in wave (v) drop to test the territory of wave (ii), we determine this as an
Ending Diagonal.
After the breakout of the lower trend line of the Wedge Pattern we spot a solid 3 wave
move.
My suggestion is to go over each of the Motive Patterns again and to try to spot them on
a few charts before you move on to cover the second phase of the Elliott Wave Theory:
The Corrective Phase.
www.elliottwavedna.com 15
Nicola Delic Elliott Wave DNA
Corrective Phase
We‘ve looked at patterns of the Motive Phase and since markets don’t just move in the
same direction all the time, we now need to take a look at the second phase; the
Corrective Phase. An easy way to remember the corrective phase would be to think of
these patterns as a three-wave move against the trend.
To separate visually the Corrective Phase from the Motive Phase on the charts, we will
label these patterns using the letters A, B, and C. From the three waves, waves A and C
will move in the same direction, and that’s usually going to be against the larger trend,
and wave B will be the correction in the middle.
There are a few more patterns to be learned in this phase, and we will cover their rules
and the best way to find them.
Image 15
Again we are going to separate all the patterns into smaller groups, so that they are
easier to learn and understand. The easy way to name these patterns would be as
Simple Corrections (Zig-Zag, Flat, and Triangle) and Complex Corrections (Double &
Triple Three).
The main difference with the Corrective Patterns would be the number of sub-waves in
waves A-B-C. For every pattern you’ll have an exact number of sub-waves you need to
find, and I strongly suggest you try to memorize them as soon as possible.
www.elliottwavedna.com 16
Nicola Delic Elliott Wave DNA
www.elliottwavedna.com 17
Nicola Delic Elliott Wave DNA
:
Image 17: Zig-Zag Correction Example in a Bullish Trend
On the USD/JPY example above we can see that the 3 wave (A-B-C) moves higher,
and the first and third legs move are more or less equal. There is not big difference
between them, and that’s the main reason why we decide on it being a Zig-Zag. Now
we have 5 waves in A, 3 waves in B, and 5 waves in C. After this correction we expect
to see an Impulsive Wave move downwards.
www.elliottwavedna.com 18
Nicola Delic Elliott Wave DNA
This USD/MXN example in Image 18 is one of the clearest on how to find the ZZ. After
a top, that occurred around August 25th, this exotic pair developed its first 5 wave
structure lower, and if you didn’t understand the larger count, you might say that we are
ending either wave 1 or wave A, right? Next we have a consolidation that looks like a
Triangle, and since we know that wave 2 can’t be a Triangle… it follows then that a Zig-
Zag in wave B is the only option! Finally we see a 5 wave move within wave C. These
are virtually equal to those of wave A.
www.elliottwavedna.com 19
Nicola Delic Elliott Wave DNA
Image 19
Waves A and B in the Flat correction are both corrective in nature, so we need to see
three waves inside each of these legs. In about 90% of cases both waves A and B are
just going to be smaller Zig-Zag corrections, but you can also expect other types of
corrections inside these such as Flat or Complex corrections. Wave C is the only Motive
Pattern, so we can expect five waves in the final leg.
Flat corrections have a few different variations but they all must have one thing in
common: wave B in the Flat needs to test at minimum 90% of wave A if we are to call
the pattern valid (you can allow 78.6% as the minimum in the Forex market).
We have three patterns in the Flat group: Regular, Expanding & Running. Although they
are all very similar, there is a slight change in each pattern.
Regular Flat
Regular Flats have three waves against the larger
trend. They have 3 waves in A, 3 waves in B and 5
waves in wave C. For the Regular Flat to be valid,
wave B needs to end at least at 90% of A wave (78.6%
is allowed in the Forex market), but should end below
100%.
Image 20
www.elliottwavedna.com 20
Nicola Delic Elliott Wave DNA
Image 21
On the image above we can see that the USD/CAD made a 3 wave move from 1.0061
to 0.9952. We have a deep pullback in wave B (although not apparent from the image
exact levels were over 78.6% of the A wave). So a Flat is the determination.
Furthermore, we held below 100% of wave A in wave B and we broke below the end of
wave A in the C wave and we can name this as being a Regular Flat.
Expanding Flat
The Expanding Flat patterns have the same
amount of sub-waves as a Regular Flat: 3
waves in A, 3 waves in B and 5 waves in C. The
only difference is with the ending of wave B. In
this type of correction wave B ends between the
inverse of 123.6% and 161.8% of wave A.
Image 22
www.elliottwavedna.com 21
Nicola Delic Elliott Wave DNA
Image 23
Again the image above has the USD/CAD as an example. We have a 3 wave move
down in wave A and a breakout above wave A, but movements still look corrective in
nature, so I labeled that next 3 wave move as wave B and, lastly we have 5 wave
downward move in the C wave. Because price action in wave B was corrective in nature
and broke through the start level of wave A, I determine this as an Expanding Flat.
Running Flat
The Running Flat is same as the Expanding Flat
in structure. We have 3 waves in wave A, 3
waves in wave B that end above the start level
of wave A, and within wave C we have 5 waves.
The difference between them is only found with
the end of wave C. In the Running Flat pattern
wave C must end above the end level of wave
A.
Image 24
www.elliottwavedna.com 22
Nicola Delic Elliott Wave DNA
Of the three flat patterns, I want you to focus on the Regular and Expanding Flats.
Running Flats are really rare patterns to see, especially with current high volatility in all
the markets, so you would label a pattern as a Running Flat only if you can’t determine
any other correction.
Image 25
On the chart above you can see that wave B broke below the starting point of wave A,
and that wave C appears as a strong and sharp move, but we didn’t have the
momentum to move more past 106.50%. So, as wave C didn’t end above the end level
of wave A we are would regard this as a Running Flat pattern.
www.elliottwavedna.com 23
Nicola Delic Elliott Wave DNA
Image 26
www.elliottwavedna.com 24
Nicola Delic Elliott Wave DNA
Contracting Triangles
Contracting triangles are the simplest five-wave triangle, where each of the triangle’s
legs is smaller than the previous one.
Barrier Triangles
A Barrier triangle is similar to Contracting triangle. This is also a five wave triangle.
Wave B and wave D need to end at similar levels. When you draw a trend line it should
form a good support/resistance area.
Image 28
www.elliottwavedna.com 25
Nicola Delic Elliott Wave DNA
Running Triangles
Running triangles are the same as Contracting Triangles with one small difference.
Wave B ends slightly above the starting level of wave A. Usually that’s the result of a
short-term spike in the market caused by a fundamental event.
Image 29
Expanding Triangles
Expanding triangles are five-wave triangles in which each leg of the triangle is larger
than the previous one. So just think of this triangle as the mirror of a Contracting
triangle.
www.elliottwavedna.com 26
Nicola Delic Elliott Wave DNA
www.elliottwavedna.com 27
Nicola Delic Elliott Wave DNA
Complex Corrections
Now we move on to a more complicated section of the Elliott Wave theory: Complex
Corrections. This is more complex as there are many options and unfortunately not as
many rules were explained by R.N. Elliott. I attempted to make this section as simple as
possible so that you don’t need to spend too much time on it.
Within Complex Corrections we find just two patterns: Double and Triple Three
Corrections.
The Double three correction develops when there’s a three-wave pattern where each
wave has three smaller sub-waves
The Triple three correction develops from five waves, where again each leg has smaller
sub-waves.
To separate Complex Corrections from simple Corrective Patterns we are going to use
the following labels: W-X-Y for the Double pattern and W-X-Y-X-Z for the Triple pattern.
Image 33
Until you are sure that you can recognize the simple Corrective Patterns well, I don’t
want you to even bother with these sort of corrections. Ideally, I prefer that you not
concern yourself with them for the first couple of weeks from when you received this
course.
I will though explain to you all that I consider you need to understand about each of
these two Corrective Patterns.
www.elliottwavedna.com 28
Nicola Delic Elliott Wave DNA
Image 34
Each of the waves could become another complex correction, but if you start analyzing
each wave in this manner one can get confused as to where the market is really headed
with many options. So, I strongly suggest that you never try to force yourself to
determine Complex Corrections within other Complex Corrections.
www.elliottwavedna.com 29
Nicola Delic Elliott Wave DNA
We don’t have many rules from Mr Elliott as concerns Complex Corrections, however I
have some rules that I use in order to make determining complex corrections less
subjective. Here are the main rules that I think you need to follow.
:
Image 35: Double Three Example
On the EUR/USD chart image above, movements appear really sharp, and you might
ask yourself why I would labeling this as a double three pattern. Within wave (W) we
have a Zig-Zag (5-3-5) pattern, then we have 3 waves downwards in wave (X) and
within wave (Y) we again have another Zig-Zag. The movements look impulsive,
however the larger picture is still corrective and once wave (Y) ended, the EUR/USD
pair started to decline.
www.elliottwavedna.com 30
Nicola Delic Elliott Wave DNA
Image 36
www.elliottwavedna.com 31
Nicola Delic Elliott Wave DNA
Again, as each of the waves could become another complex correction if you start
analyzing each wave in this manner one can get confused as to where the market is
really headed with many options. So, I strongly suggest that you never try to force
yourself to determine Complex Corrections within other Complex Corrections.
We might rarely see the Triple three pattern on a chart however, to demonstrate it,
observe my alternate count for GOLD in the image above. Over the last few years
almost everyone seems to have given up on this commodity and almost every move
looks corrective in nature. When you count how many 3 wave movements are
connected, you will see that the count is 5 (W-X-Y-X-Z) and the only thing you can label
it would be some sort of complex correction.
www.elliottwavedna.com 32
Nicola Delic Elliott Wave DNA
Take another look at the image of Double Three correction and start counting the waves as you
would count your higher highs and lower lows…
Image 38
If we start at wave (W) we can count wave A as High (+1), wave B as Higher Low (+1)
and wave C as Higher High (+1). That gives us a total of 3 Waves (X) which has 3
smaller waves, but the Higher Low is wave C of (X) so that’s another +1. And in the final
wave (Y) again we have wave A that gives us (+1). Wave B is the Higher Low (+1) and
wave C is a Higher High (+1). Now we have 7 waves in total!
To more easily identify a complex correction you will want to wait until you have 7
waves against the trend. You will then always know that this is Double Three and you
can start to buy/sell in the direction of the larger trend.
www.elliottwavedna.com 33
Nicola Delic Elliott Wave DNA
Image 39
In the above chart image the AUD/USD has been trading for a long time in a downward
trend, so corrections should be seen as pushes higher. Now if you were to check the
Higher Highs and Lower Lows you would see that from levels .7586 to .7737 we have 7
waves, but let’s break that down again step-by-step.
Leg 1 is the first high we see (+1), after that wave 2 is a Higher Low (+1).
The third leg represents a Higher High (+1) and leg 4 represents a Higher Low (+1).
Wave 5 is a Higher High (+1) while wave 6 represents a Higher Low (+1) and wave 7
represents a Higher High (+1).
In total: 7 waves; High + Higher Low + Higher High + Higher Low + Higher High +
Higher Low + Higher High. You know then that you have wave W at the end of wave 3,
wave X at end of wave 4 and wave Y at wave 7.
This part will be better and more fully explained on our webinars and inside the
members’ area!
At this stage you know to determine the direction of the market and what to expect after
you spot each of the patterns we have learned.
www.elliottwavedna.com 34
Nicola Delic Elliott Wave DNA
www.elliottwavedna.com 35
Nicola Delic Elliott Wave DNA
Image 40
Image 41
www.elliottwavedna.com 36
Nicola Delic Elliott Wave DNA
www.elliottwavedna.com 37
Nicola Delic Elliott Wave DNA
www.elliottwavedna.com 38
Nicola Delic Elliott Wave DNA
Image 42
The chart above shows the best turning point that you can pick for trying to find the start
of an Elliott wave count on an AUD/USD chart. As you can see, we find the start of this
bearish trend and we can’t use anything else if we want to be sure that when we finish
counting we are certain whether the downward move is going to continue, or if we think
the trend will end soon.
Image 43
In this example, the EUR/CHF pair started this upward trend a few days after a Swiss
National Bank crash, so now you could pick this level as the starting point of your wave
count.
www.elliottwavedna.com 39
Nicola Delic Elliott Wave DNA
Now, once you have defined your starting point look at the chart from that point up until
the current market price and ask yourself a simple question. “Does this move look to be
Motive or Corrective?”
Image 44
If you see sharp, strong movements you should conclude: Motive. If you can see
choppy overlapping movements you should conclude: Corrective. Try not to spend
hours on this step with each trade. The maximum time I would spend would be 10-15
seconds. If you are not sure of the answer just move on to the next chart!
If you concluded: Motive, try to find one of the four patterns on the chart. Just label them
1-2-3-4-5 and start checking the rules. If you concluded: Corrective, determine what
pattern from the Corrective group would best fit on your chart.
You might not always be correct, however that’s why you have these rules to assist, and
only if ALL rules match can you then enter into a trade!
www.elliottwavedna.com 40
Nicola Delic Elliott Wave DNA
Image 45
First Option - H&S represent the end of a Motive wave and a Correction.
Second Option - H&S represent the end of a Correction and the start of an
Impulsive Wave.
Tip: Check how many waves you can see from the nearest turning point. If you see 5
waves from the bottom towards the head you can conclude the first option. If you see
just 3 waves from the bottom towards the head you can conclude the second option.
Image 46
From the closest bottom end towards the H&S head we can see 5 waves so we choose
the first option.
www.elliottwavedna.com 41
Nicola Delic Elliott Wave DNA
Image 47
Option – The left top represents wave 5, pullback in the middle: wave A, right top: wave
B final drop: wave C.
Tip: Check how many waves you can see from the nearest turning point. If you see 5
waves from the bottom towards the head you could conclude that this is a Flat.
Image 48
Perhaps we don’t find exactly 5 waves, however within wave 3 we have 5 smaller
waves, so we can fit the FLAT correction inside of wave 4 as depicted on the image
above.
www.elliottwavedna.com 42
Nicola Delic Elliott Wave DNA
Image 49
Tip: Check how many waves you can see from the nearest turning point. If you see 5
waves from the bottom towards the head conclude the first option. If you can see just 3
waves from the bottom towards the head conclude with the second option.
Image 50
www.elliottwavedna.com 43
Nicola Delic Elliott Wave DNA
On the previous image, from the nearest bottom toward the end of the Wedge Pattern
we have wave 5, so this Ending Diagonal forms part of wave 5.
Image 51
Tip: Check how many waves you can see from the nearest turning point. If you see 3
waves from the bottom toward the start of the triangle conclude the first option. If you
can see a complete 5 waves from the bottom toward the start of the Triangle conclude
the second option.
Image 52
www.elliottwavedna.com 44
Nicola Delic Elliott Wave DNA
We see a Triangle pattern developing in this crude oil chart in Image 52. Before the
triangle we have all five waves already complete, so we can choose the second option
and try to determine whether this would be an A-B-C Zig-Zag correction.
www.elliottwavedna.com 45
Nicola Delic Elliott Wave DNA
Image 53
On the GBP/CHF chart above we can see that the price action developed two Higher
Highs while the RSI developed a High and a Lower High immediately thereafter. This is
a classic example of divergence in a bullish trend.
Image 54
On the chart above we see that price action of the EUR/USD pair developed two Lower
Lows while on the RSI we had a Low and a Higher Low. This is a classic example of
divergence in a bearish trend.
www.elliottwavedna.com 46
Nicola Delic Elliott Wave DNA
Image 55
On the Crude chart above we have some upwards movement that we have labeled as
an Extended wave and, according to the rules we need to see divergence between the
end of wave 3 of 3 to the end of wave 5. Since in this case the RSI supports that we
have a good chance of seeing a pullback very soon.
www.elliottwavedna.com 47
Nicola Delic Elliott Wave DNA
Image 56
The EUR/CAD chart above shows an Impulsive Wave however, to be sure that we are
right we need to see divergence between wave 3 and wave 5. In this case we have
divergence even before wave 3 ended (ideally that was end of the smaller 3 of 3). All we
actually need to concern ourselves with is that divergence is there for additional
confirmation that you are on the right track.
www.elliottwavedna.com 48
Nicola Delic Elliott Wave DNA
Image 57
www.elliottwavedna.com 49
Nicola Delic Elliott Wave DNA
Example #1 - You found 3 waves on the EUR/USD that point higher on the 1H
chart, and the 4H timeframe is showing a bullish trend. Your theory is valid.
Example #2 - You found 5 waves on the GBP/USD that point higher on the 1H
chart, and the 4H timeframe is bearish. Your theory is invalid.
These might at first appear to be small however, with a minimum of R:R of 1:3 we are
looking at either a 6% or 3% win per trade!
www.elliottwavedna.com 50
Nicola Delic Elliott Wave DNA
Best Timeframe?
For this type of trading, the best timeframes to use are the 1 Hour(1H), 4Hour (4H) or
Daily (1D).
Pre-Trade Requirements
Larger trend needs to be Bullish/Bearish (4H or 1D)
Wave 1 needs to have 5 smaller sub-waves that respect the rules of the motive phase.
Optional Requirement
Between sub-waves 3 and 5 you should be able to see divergence on the RSI.
www.elliottwavedna.com 51
Nicola Delic Elliott Wave DNA
Optional Requirement
Between sub-waves 3 and 5 you should be able to see divergence on the RSI.
www.elliottwavedna.com 52
Nicola Delic Elliott Wave DNA
Optional Requirement
Between sub-waves 3 and 5 you should be able to see divergence on the RSI.
Conservative Entry for Wave C
For the entry point place a pending
BUY/SELL at the 50% Fibonacci
retracement level of Impulsive Wave A.
www.elliottwavedna.com 53
Nicola Delic Elliott Wave DNA
Example #1 - You found 3 waves on the AUD/USD that point higher on the 1H
chart, and the 4H timeframe is showing a bullish trend. The potential trade is
valid.
Example #2 - You found 5 waves on the CAD/JPY that point higher on the 1H
chart, and the 4H timeframe is bearish. The potential trade is invalid.
Best Timeframe?
For this type of trading the best timeframes are the 15 minute (15min) and 30 minute
(30min).
www.elliottwavedna.com 54
Nicola Delic Elliott Wave DNA
Optional Requirement
Between sub-waves 3 and 5 you should be able to see divergence on the RSI.
www.elliottwavedna.com 55
Nicola Delic Elliott Wave DNA
Optional Requirement
Between sub-waves 3 and 5 you should be able to see divergence on the RSI.
www.elliottwavedna.com 56
Nicola Delic Elliott Wave DNA
Pre-Trade Requirements
Before Wave A we need to have a complete 5 wave move.
Wave A needs to have 5 smaller sub-waves.
Optional Requirement
Between sub-waves 3 and 5 you should be able to see divergence on the RSI.
www.elliottwavedna.com 57
Nicola Delic Elliott Wave DNA
Trade Examples
Example #1 - Aggressive Buy Trade GBP/JPY
Image 64
After a 5 wave move lower, the GBP/JPY pair had shown another smaller 5 wave move
and since we know that the only type of correction we can have in a 5 wave move in
wave A is the Zig-Zag, we trade wave C. Due to the smaller timeframe used (less than a
1Hr) an aggressive approach is used.
For entry points we are going to use the 50 & 61.8% levels of wave A
For the stop loss we are going to use the start of wave A
For the target we are going to use the 100% extension of wave A
www.elliottwavedna.com 58
Nicola Delic Elliott Wave DNA
Image 65
Image 66
The USD/JPY traded for a few days in an upward trend. On the chart above we can see
that the movement was Corrective. We had 3 waves in total that look like a Zig-Zag.
After a strong, sharp drop lower we started to watch for a potential sell trade.
For entry points we are going to use the 50% & 61.8% levels of wave 1
For the stop loss we are going to use the start of wave 1
For the targets we are going to use the 100% and 161.8% extensions of wave 1
www.elliottwavedna.com 59
Nicola Delic Elliott Wave DNA
Image 67
As you can see on the second chart, our target was reached, but we only filled at the
pending 50% level (the 61.8% level never got tested).
Image 68
A nice 5 wave move down had developed on the EURNZD followed by a higher spike
that looks impulsive. So we have another Zig-Zag correction. Despite the fact that we
are on the 1Hr chart we want to trade wave C. I would use an aggressive approach here
because we are trading against the trend.
www.elliottwavedna.com 60
Nicola Delic Elliott Wave DNA
For entry points we are going to use the 50% and 61.8% levels of wave A
For our stop loss we are going to use the start of wave A
For the target we are going to use a 100% extension of wave A
Image 69
After a few hours our target was reached.
Image 70
www.elliottwavedna.com 61
Nicola Delic Elliott Wave DNA
The USD/MXN had strong movement, and from the low we only had 3 waves with wave 3
obviously much, much stronger than wave 1. We are going to use the wave 4 pullback to enter
a long position.
Image 71
Although the trade took some time to play out we didn’t have any problem along the
way and we finally reached our target.
www.elliottwavedna.com 62
Nicola Delic Elliott Wave DNA
Image 72
This AUD/USD chart had an interesting 3 wave move higher that appears as a simple
A-B-C. After that we had a 5 wave move downwards. Now, even if you don’t know the
larger count you can tell yourself that this is either the end of wave 1 or wave A. In both
cases you are going to get a pullback that will be a good place to sell.
For entry points we are going to use the 50% & 61.8% levels of wave 1.
For our stop loss we are going to use the start of wave 1.
For the target we are going to use the 100% extension of wave 1.
Image 73
Both targets were eventually reached and our stops held the entire duration of the
trades.
www.elliottwavedna.com 63
Nicola Delic Elliott Wave DNA
Image 74
Here we see that the S&P larger trend is definitely up and after a nice amount of
downward movement we finally see a decent 5 wave move upward so, we are
automatically going to start looking to go long (buy) after any corrections.
For the entry point we are going to use the 50% level of wave A.
For the stop loss we are going to use the start of wave A.
For the target we are going to use the 100% extension of wave A.
Image 75
www.elliottwavedna.com 64
Nicola Delic Elliott Wave DNA
In approximately two days our targets were reached and the market can be seen still
heading higher.
Image 76
The EUR/USD had been trading in a strong downward trend for a long time so ideally
we are going to watch only for selling setups at any correction move (3-wave up in this
case). After smaller 5 waves within wave 1 we can conclude that the previous correction
is over, so we can start watching out for a pullback in wave 2 as our entry point.
For the entry point we are going to use the 50% level of wave 1.
For our stop loss we are going to use the start of wave 1.
For targets we are going to use the 100% and 161.8% extensions of wave 1.
www.elliottwavedna.com 65
Nicola Delic Elliott Wave DNA
Image 77
On the second chart you can see that wave 2 was a bit of a deeper pullback, but our
stops held and in the end we managed to reach both targets.
Image 78
On this chart of the AUD/CHF pair we can see a really nice upward trend that already
has a 5 waves in the direction of the larger trend. According to our strategy we know
that we are going to next expect to see at least a 3 wave movement in the opposite
direction. After waiting for the first leg to develop we watch for the B wave as our setup
wave.
www.elliottwavedna.com 66
Nicola Delic Elliott Wave DNA
For entry points we are going to use the 50 & 61.8% levels of wave A.
For the stop loss we are going to use the start of wave A.
For the target we are going to use a 100% extension of wave A.
Image 79
In the second chart we can see that both of our entries were filled and we can also see
that our target for the C wave was also reached quite quickly.
www.elliottwavedna.com 67
Nicola Delic Elliott Wave DNA
Conclusion
First of all, I would personally like to congratulate you on deciding to improve your
trading with my assistance. If you are reading this section that can only mean that you
are one step closer to pushing your trading to the next level!
Maybe it will take some time to practice all you learned from this manual and the Dvds
however nothing good ever comes overnight, so just keep practicing. If there is
something that isn’t clear just reach out to me, especially in the members’ area, and I
will help you.
Before I leave you to start practicing… if you could do me one small favor. Every single
day try to become a better trader. Practice spotting the best setups in the market.
Practice trading by trading your setups. Try to learn from your mistakes and, most
importantly, believe in yourself!
EVERY SINGLE DAY THE MARKET WILL GIVE YOU A FEW CLUES OF WHAT TO
EXPECT NEXT. YOUR JOB IS JUST TO FIND THOSE CLUES IN TIME!
My Best Always!
Nicola
www.elliottwavedna.com 68