Did you ever wonder if there is an indicator that helps simplify Elliott Wave analysis? How does a “wave trend indicator” work or is it better to trade waves without it?
The short answer is yes, a wave trend oscillator is a critical tool for analysing and trading waves. This article reveals what is considered the best wave trend indicator or wave trend oscillator.
We also explain how to use indicators for improved price swing recognition and Elliott Wave analysis. Plus we show traders a simple method that drastically improves your accuracy when determining price swings and wave patterns.
By the way, if you become a member today, then we will show you a simple trend strategy by using Moving Averages, Fibonacci, Fractals and the wave indicator in our SWAT (Simple Wave Analysis & Trading) course.
Yes, they can. According Chris Svorcik, our chief wave analyst at Elite CurrenSea, both price action and the oscillator indicator can be of enormous help in understanding the Elliott Wave structure.
Based on our own experience, we highly recommend analysing Elliott waves based on price action in combination with an oscillator. The best indicators are the AO (Awesome Oscillator) and macd.PRO (we explain why later on).
The main benefit of using an oscillator for understanding waves is because it offers a standard method for spotting price swings.
Often traders face a simple yet tough problem: what is the definition of a price swing and wave?
Traders must have a clear and logical system of identifying one price swing because without a rules based approach, traders will misinterpret the chart and always be unsure about their analysis.
In fact, most traders fail in trading, mastering the waves, and trading the waves because they do not use a systematic method for understanding and reading price swings.
With a systematic approach, traders will quickly feel lost in the chart. What price action belongs to which price swing? When does the price swing start and end?
In this article Elite CurrenSea will share its methods (based on our SWAT course) how we use the oscillator for a better understanding, interpretation, analysis, and trade setups based on the wave patterns. In our view, traders improve their the Elliott Wave count with the Awesome Oscillator and/or ecs.MACD – this article explains why.
So now, you might be wondering how do you use the Elliott Wave indicator for analysing and trading waves?
Elite CurrenSea uses the Awesome Oscillator (Elliott Wave) as a wave trend indicator – available for free via MetaTrader 4/5 (MT4). The AO (Awesome Oscillator), which is created by the Elliott Wave expert, legendary trader, and Fractal creator Bill Williams, is in our view the best oscillator for analyzing the waves of the Forex, CFD, and other financial markets.
A good second place, however, is reserved for our own proprietary MACD indicator called the macd.PRO. Although there a wide range of wave trend indicators that are mentioned online, the AO and the macd.PRO are two of the most accurate wave trend indicators and wave trend oscillators for the MT4 platform. They are also key indicators for any trend wave strategy. We will now explain why.
There are multiple solid methods of applying a rules based approach for identifying the correct price swing. But we will continue our focus on the AO (Awesome Oscillator) and macd.PRO. Once again, both indicators are excellent ave trend oscillators for MT4.
Here are the key factors to analyse:
With this in mind, we can make the following conclusions:
1. Price is not hitting the zero line recently:
2. Price is near the zero line:
When the Awesome Oscillator Elliott Wave bars are back at the zero line, price has completed an old price swing and is building a new price swing. This means that it has reached an indecision spot:
How do you recognize on the price chart what is the correct price swing when analysing the zero line of our wave trend indicator, the Awesome Oscillator Elliott Wave or macd.PRO,?
As indicated above, the cross of the zero line is key for understanding price swings and wave patterns. Here is an example of how traders can understand the process in more detail.
The above image is an example where we zooming to one spot of the chart. Let’s now show a chart now which shows a larger piece of the price action.
The above chart shows purple arrows, which indicate each time the Awesome Oscillator Elliott Wave bars cross the zero line. Each crossing of that zero line indicates the end of a price swing and wave pattern too.
The purple boxes on the chart indicate the turning spot of each swing whereas the arrows in between the purple boxes show whether the price swing is a:
Compare the above chart to a naked chart that you can see here below. Would you be able to achieve the same consistency with the Awesome Oscillator Elliott Wave as without the AO? Would you truly be able to recognise the price swings as quick and with the same consistency?
That is possible for traders who have more experience but is much more difficult for traders that are beginning or intermediate. They are much better by using a rules based approach. All the rules connected to this and much, much more is what we fully explain in our ecs.SWAT methodology, which offers a clear wave trend strategy.
Now that you know how you can find, measure, and analyse the correct price swing on any chart, we wanted to provide you with more examples on how to identify momentum and correction.
Once you know how 1) to spot the correct price swing, 2) know its direction (bullish or bearish), and 3) know its behavior (impulsive or corrective), then you are well on your way to becoming an Elliott Wave analyst.
Wave analysis is nothing more or less than analysing price swings from the past and analysing what the current and next price swing is likely to be. Analysing swings is like putting together a puzzle and you are using the pieces from the past to understand what piece might fit next.
Although wave analysis might sound or seem complicated, its complexity is massively reduced when using a wave trend indicator or wave trend oscillator to understand price swings. But keep in mind that knowing how to do wave analysis is not necessary if you trade our ecs.SWAT method because we trade the waves without labeling them and you can do the same.
Although we will not dive into all the facets of wave analysis in this sub paragraph of today’s article, we did want to provide an overview of how the the Awesome Oscillator (AO) works together with wave analysis. Once again, the AO is a great wave trend oscillator for the MT4 and works well for any trend wave strategy.
The AO bars are showing a first stronger push away from the zero line, often into the opposite direction of the previous swing.
A shallow retracement back to the zero line occurs, but the Awesome Oscillator Elliott Wave bars do not go much into the opposite direction.
Strong Awesome Oscillator Elliott Wave bars push away from the zero line. Keep in mind that the wave 3 might become extended and hence you might see several strong pushes away from the zero line. Some of these pushes could all be part of a larger wave 3.
Eventually the strong wave 3 will finish and a larger retracement will take place back to the zero line, which could easily occur on a higher time frame as well because waves 4 are often lengthy.
The last push in the trend. The Awesome Oscillator Elliott Wave bars move away from the 0 line but not as much as the wave 3, which creates divergence because price does often make a higher high but the Awesome Oscillator Elliott Wave does not.
The Awesome Oscillator Elliott Wave bars were closer to the zero line usually because the trend is becoming slower. The first counter trend move shows impulse as the AO bars cross the zero line and keep their speed, moving into the opposite direction.
A last push with the previous trend but the Awesome Oscillator Elliott Wave bars hardly cross the zero line any more.
The larger correction continues as a large push creates a 3rd counter trend wave.
When a triangle or wedge chart pattern takes place, the Awesome Oscillator Elliott Wave bars will be mostly hanging around the zero line.
There are many benefits for using the correct price swings:
Simply said, a rules based approach for price swings is a must to understand the charts in more depth – in general.
In specific, the AO and macd.PRO are both extremely valuable for identifying the correct price swings with a rules based approach.
This in turn allows traders to make more sophisticated, quick, and educated analysis about Fibs, chart patterns, and momentum and correction.
They are equally valuable in determining wave patterns because wave analysis is simply an analysis of price swings. Once you understand price swing, you will understand wave patterns too.
In the field of Elliott Wave analysis both oscillators provide key information about the exact price swing, wave count, and wave pattern outlook. Here are the three major benefits of using the AO or the ecs.MACD as a wave trend indicator:
If you do not use the AO or macd.PRO, the problem occur when applying a discretionary (and not a rules based method based on oscillators) approach to your wave analysis:
The key to success in analysing and trading price swings and the Elliott Wave Theory is by applying a systematic way of identifying one single wave.
This can be done via the AO and macd.PRO. Both are excellent wavetrend oscillators and wavetrend indicators.
Our SWAT course explains exactly how to see and trade price swings and waves in a precise method with various trading systems and a clear wave trend strategy. SWAT is an excellent trend wave strategy.
But there is a “dispute” among wave analysts and some believe that indicators do not play any significant role. The problem of spotting price swings and waves without any indicator help is that it quickly becomes confusing.
Traders get lost in a sea of options: does this swing belong to this or that swing? This is especially true to beginning and intermediate traders.
By using a wave trend oscillator and moving averages, the trader breaks down the learning process into more doable steps. They can build up experience and translate that into more specific trading ideas.
If traders only look at price action, then the learning curve is much steeper, it is more difficult to gain confidence, and the trade ideas are often more confusing.
Not using the wave trend oscillators at first is similar to driving a Formula 1 car at max speed without any training. The wave trend oscillators give you that well deserved training.
All in all, the Elliott Wave count with the Awesome Oscillator is a major asset when analysing the charts, price swings, and wave patterns as it helps you:
Analysing wave patterns is nothing more or less than understanding the sequence of price swings.
Mastering wave analysis is now within your reach.
If you are interested in learning how to apply a wave trend indicator such as the macd.PRO and AO for analysing and trading waves, then we recommend becoming a SWAT 2.0 member.
You will learn a wave trend strategy and benefit from the educational course with 22+ hours of recording, 74 videos, 10 systems, 3 methods, and dozen plus indicators.
Keep in mind that knowing how to do wave analysis is absolutely unnecessary if you trade our ecs.SWAT method. The beauty of SWAT (Simple Wave Analysis & Trading) is that you can: trade the waves without knowing the waves.
We built our SWAT methodology in such a way that you can benefit from the waves without needing to use the wave patterns themselves.
Join our World of Trading by starting with ecs.SWAT !
Or feel free to also try our automated trading solutions as well.
Thank you very much for this instructional article. It is truly helpful and you guys are truly an inspiration.
Most welcome! Thank you for reaching out :))
Thank you very much for all the information on swings, waves and the OA!
Thank you for letting us know, happy to hear it 🙂