Visual Guide to Elliott Wave Trading

By Wayne Gorman and Jeffrey Kennedy

Quick Summary

Gorman and Kennedy provide a practical, visually-oriented guide to applying Elliott Wave Theory in real-world trading. The book moves beyond theoretical wave counting to focus on actionable trade setups, using extensive chart examples to demonstrate how Elliott Wave patterns generate specific entry points, price targets, stop-loss levels, and trade management strategies across multiple markets and time frames.

Detailed Summary

Elliott Wave Fundamentals Applied

The book assumes basic familiarity with Elliott Wave Theory and focuses on practical application. The Wave Principle's core contributions to trading are presented as: identifying trend direction (whether the larger pattern is bullish or bearish), determining trend maturity (whether a move is early-stage or exhausted), generating price targets through Fibonacci relationships between waves, and providing clear points of invalidation where a wave count is proven wrong.

Trading Impulse Waves

Detailed chapters cover trading strategies for each wave within the five-wave impulse structure. Wave three trades (the strongest and most profitable wave in a five-wave sequence) receive particular attention, with guidelines for identifying the completion of wave two corrections and positioning for wave three advances. Wave five trades, including blow-off tops and their measurement techniques (post-triangle thrust measurement), are illustrated with examples including heating oil futures and soybean futures contracts.

Trading Corrective Patterns

Zigzag corrections, flat corrections, and triangle formations are each given dedicated treatment with specific trading guidelines. The 5-3-5 structure of zigzags, equality relationships between waves, and Fibonacci multiples provide precise target and stop calculations. Triangle trading -- using the boundary lines and post-triangle thrust measurements -- is presented as one of the highest-probability Elliott Wave setups.

Ending Diagonals and Advanced Patterns

Ending diagonal patterns, which signal trend exhaustion, are covered with examples from Wynn Resorts and other securities. The combination of Elliott Wave analysis with traditional technical indicators (RSI, MACD, candlestick patterns) for evidence-based trading decisions receives detailed treatment. The concept of bearish and bullish divergence between price and momentum indicators is integrated into the wave analysis framework.

Trade Management

Each chapter includes complete trade plans: entry triggers, initial protective stops, price targets based on Fibonacci wave relationships, and guidelines for when to move stops to breakeven or trail them. The concept of dual trading plans -- preparing both a bullish and bearish interpretation of the wave count and having trade plans ready for either scenario -- is presented as essential for managing the inherent uncertainty of real-time wave counting.

Categories

• Technical Analysis
• Elliott Wave
• Trading Systems

Key Takeaways

• Elliott Wave Theory provides trend direction, maturity assessment, price targets, and invalidation points
• Wave three trades offer the highest profit potential within the impulse structure
• Triangle formations and post-triangle thrusts are among the highest-probability setups
• Combining wave analysis with traditional indicators (RSI, MACD) improves trade confirmation
• Dual trading plans (bullish and bearish scenarios) are essential for managing wave count uncertainty