A Forex Trading Strategy Using Elliott Wave Indicators

Elliott Waves were first discovered by R.N Elliott in the 1930s. What he found was the markets follow a certain wave pattern over the long term as well as on the short term that is repeated over and over again. This wave pattern is now considered to be a universal law of the markets and is named as Elliott Waves.

Price action can be divided into tends and corrections or sideways movements. Elliott Waves Theory stipulates that markets move in repetitive patterns. There is always a five wave advance ( impulse waves) and a three wave decline (corrective waves). Waves 1, 3 and 5 are the impulse waves, wave 3 being the longest. Waves 2 and 4 are the corrective waves. These impulse waves are the trends in the market and the corrective waves are the sideway movements in the market.

You can observe these wave patterns on all timeframes and within one wave you can further subdivide it into smaller patterns.

In this forex trading strategy, we will be using this Elliott Wave Pattern with the help of three Elliott Wave Indicators.

On most of the charting software, you can find these three Elliott Wave Indicators.

1. Elliott Wave Trend (ET)

2. Elliott Wave Number (EN)

3. Elliott Wave Oscillator (EWO)

These are the rules for going long with these three indicators: EN should be 3 or 5. ET should be 0 or 1 and EWO should be a positive number. These three things must happen simultaneously. When you find the three indicators lined up together, you should look for an opportunity to go long immediately. When EWO becomes negative immediately close your position. EWO below zero means price action is about to retrace itself.

And these are the rules for going short: EN should be 4. ET should be 0 or -1 and EWO should be a negative number. These three things must happen at the same time. Exit your position when EWO becomes positive.

This Elliott Wave Trading Strategy can be used from 5 minutes chart upto daily and even weekly charts and even higher. You can also use it on stocks. Always remember to use a stop loss when trading with this strategy.


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Mr. Ahmad Hassam has done Masters from Harvard University. Master this highly profitable Magic Breakout Forex Strategy by Tim Trush & Julie Lavrin FREE. First practice on your Forex Demo Account.