Elliott Wave Oscillator Indicator
Elliott Wave Oscillator is a technical tool for trading Elliott Waves. The indicator is an ideal tool for identifying trend reversals.
The Elliott Wave Oscillator is based on the Elliott Wave Theory by Ralph Nelson Elliot. According to the theory, the market moves in waves. Waves consist of three impulse movements and two corrective movements. In other words, there are ups and downs in the direction of the trend.
Elliot helps you discover these waves and integrate them into your trading strategy. The oscillator works in all instruments. While you can use it in short term trading, it works best in medium to long term trading.
How to use the Elliott Wave Oscillator
The market price forms five waves. The first, third and fifth waves go in the direction of the trend. The second and fourth waves are corrective. The indicator shows its strongest value when the third wave forms and the price reaches new highs. The price touches new highs when the fifth wave forms, but the oscillator diverges. Simply put, the price jumps to new highs, but the oscillator makes a lower high. This marks the end of the pattern, signaling a trend reversal.
The same case applies for a downtrend. The third wave coincides with the price falling in the direction of the trend. The price drops to lower lows as the fifth wave forms but the EWO diverges.
Trading example
The indicator shows the price movement of the Australian dollar against the Canadian dollar. The price chart forms waves. The oscillator makes its biggest low when the third wave makes a lower low/new low. However, the price makes a lower low during the fifth wave, but the oscillator makes a higher low. This indicates that the wave pattern is coming to an end and the price is preparing for a reversal.
Conclusion
The Elliott Wave indicator makes it easy to trade using Elliott Waves. It indicates a wave formation, highlighting the end of Elliott wave patterns and an impending price reversal. This indicator is best for people who trade using Elliott Waves.
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