Hello Steemians,

This is my homework task for The Steemit Crypto Academy Season 2 Week 6 by professor @fendit

Trading is all about buying and selling coins in cryptocurrency and thorough research is required two minimize the risk and losses. This theory is a part of analyses that is helpful to understand the market better.

What's the application of this theory?

This Elliott Wave Theory what introduced back in 1935 and it has got so much attention by the people because of the methods that were introduced with its arbitrators to understand the market better and even now it is significantly. The market works in both ways sometimes in a bullish trend and sometimes in India this time so using this theory traders are able to conclude whether it is in bullish or in barest and so that they can invest accordingly and plan out their further plan of action.

People say that market is completely unpredictable but if a proper theory is applied in analyses then for sure we can get a closer picture of the market that will help us understand whether it is the right time to put money or not. Any experienced trader never invest blindly and follow various methods to understand market and I need an expert trader who has thorough information about the market who prefers to go with this theory.

Elliot had introduced this fantastic theory which helped traders to understand the psychology of the market. Market it is very important to understand the time for entry and exit and with this theory, it has become much better and effective that's what made the theory so popular in 1935. Since it was introduced with a great concept so even now people are buying it a lot and following with their market analysis before going for the trades.

What are impulse and corrective waves? How can you easily spot the different waves?

Impulse Waves

This is a method to measure and understand the market trend. This helps us to understand the market variation is larger price fluctuation. The Market sometimes behaves differently and its because people who have invested try to book the profit and it creates some selling pressure. Its very common that people buy at low and when they see some profitable situation then they start selling. Experience traders sell off their holding when market sentiments are bullish and that's when we should avoid buying. Although we can't determine the exact buying point and closer understand can be concluded.

When there is any news floating around then more buyers enter in the and that's the time when a regular trade take the benefit and do the sell to book the profit. The market is based on buy and sells that totally depends upon supply and demand. When demand is high then its the time to sell and we should avoid buying because prices are bound to go high.

There are 5 types of waves in this and here waves is referring to the different point that is generated based on market behavior.

Corrective Waves

After impulsive waves, we get to see correction waves in the market at different price ranges. Correction is an important market of the market and before it makes its all high a correction is needed. Corrective waves move in the opposite form and its not easy to spot.

I have taken this chart for BTC/USD from trading view and there are 5 corrections that I have mentioned with numbers. You can see that all of the corrections are different and not at all matching with any other that happened either previously or later on.

I have taken this example from the current market so we can also figure out that the current market is in correction and this is a good example of Corrective Waves in the current scenario.

This is how we can spot whether its an impulse wave or a corrective wave depending upon the market trend. Now since the market is in correction as per the chart so it can a time to buy at different levels.

What are your thought on this theory? Why?

I have to say that this is a great tool. If we use it properly then it can make our trade not just least risky but also more profitable since we will be able to conclude the time for entry and exit. Trading can be so easy if we got to know the right time to enter and exit and if we don't know this then its very much complicated.

I believe that we must study the market properly using this theory so that its clear to understand the market sentiments and investment can be better rather than putting the money blindly. This theory is not just a method instead it's a fantastic and effective tool that we can use for thorough market analysis and figure out the right time to enter and exit in the market.

Reason why this Theory is useful

• Easy to understand the waves of the market whether impulse or corrective. Its an important part of experience trading.
• Trader can figure out the time to enter and exit after going through the market analysis.
• We can identify the sports where we need to put Stop-loss to minimize the risk.
• We get to know the support and resistance levels for multiple entries in the market looking at the right time and profitable spot.

Coin chart for Analysis- STEEM/USD

I have taken this chart for Steem with USDT pair from the trading view. I have applied Elliott Wave Theory on this chart and it helped me to figure out both impulse and corrective waves in this. There are different spots that I ave marked in this snapshot-

There are many buying zones where we can see the prices going up because of traders' entry and thereafter a dip showing the correction in the price. Steem has been in a bullish trend and now its in a corrective wave and prices are going down now.

Let's understand this chart using EWT theory

1- Price was slightly bullish and we can see the upside movement with steem and the price went close to $0.80
2- Price did not stay stable for long and there was a correction that dropped it to $0.60
3- There was another impulse wave that takes the price above $1 and it was quite strong.
4- Another corrective wave made the price fall around $0.90 but this price was still higher than what we had before.
5- This time it was even higher and the price went more than $1.3

A- We can say its big correction in the price and it showed a drop of almost 50% in the price which is big and sometimes we can see this kind of corrective waves.
B- This is the second attempt at corrective waves that drag the price down to quite a lower mark again.

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Conclusion

Overall, I enjoyed the class by professor @fendit and there is a lot to learn about EWT. I never heard about Elliott Wave Theory and this was a completely new thing to me. Trading is easy and difficult depending upon the way we trade so if we follow all this theory then it can be easy and profitable but at the same time if we do not follow it then it can bring some losses as well.

Thank you so much