Followers of R.N. Elliott do count waves. This week Pretzel Logic's Market Charts and Analysis (see blogroll) published a two part Introduction on understanding Elliott Wave Theory. After reading that 101 on counting waves, a handy tool for counting waves and thus analyzing the wave structure would come in handy, right?
It happens some years ago Elliott Wave International's chief commodity analyst and "Futures Junctures Service" editor Jeffrey Kennedy" presented his Trend Analyzing Tool in a webinar. On Tuesday, 22 December 2009, EWI disclosed the formula to the public on their website.
(Screen shot of the "Jeffrey Kennedy's Trend Analyzer Tool", or ,JK_TA for short, Fast and Baseline)
JK Fast Line measures the most immediate, near-term progression of a market's trend and smallest degree of the Elliott wave structure.
JK Base Line measures the intermediate progression of a market's trend.
JK Slow Line (not show on screen shot) measures the long-term progression of a market's trend.
JK Slow Line (not show on screen shot) measures the long-term progression of a market's trend.
In the original JK_TA each panel of the indicator consists of three lines: a 5-period %R, a 10-period %R and a 15-period %R of the line concerned.
A reading of 100 indicates an uptrend. A reading of 0 indicates a downtrend.
A reading of 100 indicates an uptrend. A reading of 0 indicates a downtrend.
The JK TA as such is as a proxy for clarifying the underlying Elliott wave structure:
When all three lines in any version are flatlining (blended into one), it signals an impulsive, or motive, structure. See the blue lines in screen shot.
On the other hand, anytime you see the three lines separate, it's a strong signal that the market is yielding a countertrend, or corrective pattern.
On the other hand, anytime you see the three lines separate, it's a strong signal that the market is yielding a countertrend, or corrective pattern.
The JK_TA can be used on any instrument and on any time frame:
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The first, second and third chart depict the basic indicator for different time frames. The fourth chart shows a custom variant of JK_TA: the Fast, Base and Slow lines packed together in one panel, selectable by the 5%R, 10%R or 15%R version of the three indicators.
Anyone needing help in counting waves can download the thinkscript studies from the comment section. While the default settings are 5 and 20, these may be adjusted to ones preferences.
Ready? Start counting!