During mentoring sessions and live classes one of the most common statements I hear is, "None of you use Elliott Waves in your trading..." We hear this because most of us do not look at the actual Elliott Waves on our charts. However, just because the blue numbers are not on the chart that does not mean that we are not using the theory. In my own trading I would estimate that 95% of my trades are using the Elliott Theory (the remaining 5% Gann) yet you never see the counts on my screen. How can I do this? Easy, it's all in the Oscillator.
In the Advanced GET Elliott Wave strategies we always confirm the wave counts before taking a trade as part of our mechanical rules. Monitoring the 5/35 Oscillator can give you a quick look at where you are in the trend and what Elliott Wave we are most likely in. In my trading and in GET there are 3 distinct oscillator patterns I look for.
1. The Wave 3 - The Elliott Wave 3 is the easiest pattern to look for on the chart. If you find yourself saying, "I wish I was long (or short) this market" chances are it's in a Wave 3. You can confirm this by simply looking at the oscillator pattern.
2. The Elliott Wave 4 - In the type one trade the second rule is that the oscillator must pullback between 90% and 140% of the highest oscillator peak during the Wave 3. In order for you to have a true Wave 4, you must first have a true Wave 3. Just because the oscillator is at the zero line does not necessarily mean you have a Wave 4, the pullback must occur after a major peak like we had above.
3. The Elliott Wave 5 - Elliott Wave 5 is defined as a second attempt at new highs or lows but with less strength. The first pattern that we need to see is that the market made a new high, once it does then we can look to the oscillator to confirm if the new high has less strength. This pattern is known as oscillator divergence.
Once you know and can recognize the oscillator patterns, very often you won't need to see the wave counts on the charts. The advantage of this is that you can simplify your screens and not be so focused on the counts and the potential changes that they can make. Your still using the power of Elliott but in a much more clear way.