ENTH

PART 2 · Tools

Reading Elliott Wave with Redhat

Elliott Wave is the art of counting market waves — it says the market moves in waves: 5 large waves (pushing forward) followed by 3 waves (pulling back). Redhat counts the waves and labels (1)(2)(3)(4)(5)(a)(b)(c) for you right on the screen

Chapter 4 hero

Chapter summary video

Real chart screen recording · not investment advice

Listen to the TL;DR summary of this chapter

Elliott wave diagram impulse 5 waves and corrective 3 waves
Elliott Wave: Impulse (1)-(5) + Corrective (a)(b)(c)

TL;DR

Elliott Wave is a way of counting the waves of the market — 5 push waves + 3 pull waves. Redhat counts the waves and labels them on screen; wave 3 is the strongest and (2)(4) are often entries — but wave counting is interpretation, it can redraw, so never hold it as iron law

1 · What is Elliott Wave

Elliott Wave is the theory that the market moves in waves — 5 large waves (pushing in the same direction) followed by 3 smaller waves (pulling back)

Redhat already has the Elliott Wave switch built in — it can count waves and label (1)(2)(3)(4)(5)(a)(b)(c) automatically — but in the current state label display is turned off, so users count from the swing points themselves

One-line definition

Elliott = counting market waves, 5 push 3 pull; Redhat helps point out the swings, the user does the counting

2 · How to count waves on the Redhat screen

Redhat has automatic labels when enabled (currently turned off): push waves = (1)(2)(3)(4)(5), pull waves = (a)(b)(c); each label sits at the high or low of its wave

The rule it applies: wave 3 must not be shorter than wave 1 × 0.618 (W3 ≥ 0.618 × W1); if it is shorter = miscounted, and the system redraws

wave structure counted from highs and lows on an XAUUSD H4 chart
Wave structure on a real XAUUSD H4 chart — uptrend waves stacking clearly, countable from the highs and lows · honestly: the automatic wave labels are not shown in the current state, users count from the swing points themselves
Teacher Bom's tip

If the labels look too small to read = zoom the candles larger or scroll the chart to a stretch where the waves are clear — not every stretch has a full 5 waves

3 · How to recognize the waves

Remember 2 key points: wave 3 is the strongest and usually the longest, and (2) and (4) are usually where price turns = the entries Elliott traders watch

  1. Wave 3 — the strongest, usually the longest, where the trend accelerates
  2. (2) and (4) — turning points, often entries
  3. (a)(b)(c) — the pull-back waves after wave 5
"Waves can change — counting is a guide, never bet your life on it"

4 · The honest scope: wave counting is personal

Said plainly: wave counting is personal — no two people count exactly the same, and as price moves on Redhat may redraw the labels with numbers changed from before

So: use Elliott as a supporting guide, not an iron law to bet your whole account on

★ Understand it this way

Elliott can redraw — seeing labels change is normal; do not panic and never make it your absolute reason to enter

This chapter in one line

Elliott = counting waves, 5 push 3 pull; Redhat labels them, wave 3 is the strong one and (2)(4) are entries — but wave counting is interpretation, it can redraw, never treat it as iron law