Thread by @ProdigalTrader

Elliott wave theory says price moves in 5 waves up and 3 waves down
Let’s concentrate on the 5 wave up move part.

Here wave 1 is analogous to the first higher high after deeper correction. Here trend reversal sets in.

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It followed by a deep correction in the form of wave 2. Having made a higher low in wave 2,
wave 3 confirms above the top of wave 1.
That’s supposed to be the strongest price move in the entire cycle.

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This followed by a very shallow correction which usually lesser than 50% of the entire wave 3,
usually its lesser than 40% even.
This shallow pullback is a signal that another strong up move is on the cards.
That wave 5 which terminates the up move cycle.

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Wave 3 characteristics:

Vertical up move; usually 30% (say, in one month) to 100% (say, in six months) gain
Very high volume in the entire up move.
Most of the bull bars closes near the highs, many Wide Range Bull Bars and lots of gap up opens

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Wave 4 characteristics:

Sideways range bound move with bars going back and forth
Volume very less
Volatility decreases & bars tend to be smaller
Retraces usually <40% of the entire wave 3.

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With these characteristics,
it’s fairly easy to identify wave 3 & 4 happens in succession.
The motive behind this exercise is
one would be able to catch a good wave 5 move
very early into the up move in that wave.

Here 2 examples
#Bayercrop
#KSCL

wave 5 is the catch

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Without going into the complexity of Elliott wave,
we can identify a potential good scrip
by identifying the price volume dynamics in such scrip
during a correction phase after a trending move.
When it matches with EWT,
we potentially found an excellent scrip

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