Elliott Wave Theory is one of the most popular prediction model to speculate the direction of prices in Stock Market. It was developed by R.N. Elliott and got popular through the efforts of Robert Prechter. Elliott Wave theory is primarily based on Dow theory which asserts that stock prices moves in cycles. These cycles are a result of mass psychology which shows up repetitive patterns when applied on stock charts. Every single element of these patterns are termed as waves in Elliott wave theory. In this post we would understand Elliott Wave patterns in detail and learn how to compute waves in Elliott Wave Analysis Excel Sheet. This excel sheet is downloadable at the end of this post.
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Deep Dive into Elliott Wave Theory
As per Elliott Wave Theory, a combination of 8 waves constitute a complete price cycle. Out of these 5 are called Impulsive waves and 3 are called Corrective waves.
When the primary market trend is bullish, impulsive waves are in direction of trend (upwards) while corrective waves are opposite to the trend (downwards).
Similarly, when the primary market trend is bearish, impulsive waves are in direction of trend (downwards) while corrective waves are opposite to the trend (upwards).
The above pattern formation does not depend on timeframe. You can observe Elliott wave patterns in intraday charts as well as monthly charts. However, the probability of false waves decreases in higher time frame charts.
There are 3 guiding principles or rules regarding the wave lengths in Elliott Wave cycle:
Rule 1: Wave 2 cannot retrace more than 100% of Wave 1.
Rule 2: Wave 3 can never be the shortest of the three impulse waves.
Rule 3: Wave 4 can never overlap Wave 1.
Elliott Wave Theory Example Chart
Below is the practical application of Elliott wave theory in Crude Oil chart:
Reference: http://atozforex.com/wp-content/uploads/2016/11/Crude-oil-weekly.png
Elliott Wave Analysis Excel Sheet Overview
This excel sheet calculates the possible range and time period of Elliott waves based on the input for wave 1. See the below description:
| Parameter | Description | |
| Worksheet Name | Elliot Wave Calculator | |
| Inputs | Number of candles (B5,B16) | Number of candles or bars wave 1 lasted. |
| Start Price (C5,C16) | Starting price for wave 1 | |
| End Price (D5,D16) | End price for wave 1 | |
| Outputs | Time Period (column E) | Time Period for each wave |
| Wave 2,3,4,5,a,b,c range and time period | The probable range and time period of other waves based on input given for wave 1 | |
Screenshot
How to use this Excel Sheet?
Please follow the below instructions to download multiple stock quotes into Excel for free:
Step 1: Download the sheet from the end of this post to your local computer.
Step 2: Open this Excel file and input parameters for wave 1 in the highlighted yellow cells.
Step 3: Check probable range of other waves and plan your trades accordingly.
Download Link for Elliott Wave Analysis Excel Sheet
Please download the Excel sheet from the below link. Let us know in the comments section if you have any queries.
Elliott Wave Analysis Spreadsheet
Much appreciated work!
Could you please enlighten us how to use this i.e in highlighted area we have have to enter the last day data or last 5th day data?
How to evaluate the results?
what the wave 2,3,4,5 and ABC are indicating?
Please do not mind I never used the Elliot wave and even doesn’t know much about it but listened a lot so curious to learn about it
One more thing I am working on my option strategy project so could you help me how to calculate Implied volatility in excel for indian market?
Would be greatful if you help me to figure out this
Thanks
Hi Avtar,
Request you to read the article once again. Pretty much all of your questions are answered there. Why do you want to calculate implied volatility, its already available in NSE website.
Thanks for the Reply actually I am doing my own project to find the best option for trading in excel sheet just like you are doing lot of projects in excel but not able yet to calculate the Implied Volatility by putting the following data
Stock Price,Strike Price,Option Price,Days remaining….etc
And am damn sure that will help the traders to make a lot through options so if you or anyone can help me in this forum would be greatful for that
with nse data have to work a lot and in the mean time high chances to miss the opurtunity like today in axis Bank and you know my project saves me by preventing not to enter in TCS call
Hi, thanks for the article . I want to know from where to get the Number of candles no. And what is this start price / end price.
Secondly after putting data, what will be the outcome and what is it significance
Hi Rahul,
Number of candles, start price and end price is the length of 1st wave which you need to observe in the chart. Please read the article to understand the significance of output values
Great Work! Thanks.
Many thanks for the great work!
What would the time period 200 mean over here?
Does it mean 200/ 5bars = 40mins each candle represents
Hi Neha,
It means 200 candles. So if you are studying 1 min chart, it would be 200 minutes.
Hi Great Job.
Just needed a Clarification .. if i am looking at a weekly chart , the time period that i get is to be considered as weeks or days?
Hi Abhijeet,
It should be weeks for weekly charts.
Hi,
Great piece of work here. Further, I wanted to understand the time period column, like in the example above for bullish trend- 5 candles means 5 days or something else? similarly time period is 200 – does this mean it is 200 days or something else. Applying this analogy
Hi Shamoil,
It depends on the timeframe you are using
i would like to use
I would like you to make it clear as to what and how to fill the yellow figures. there is no mention of this in the article. I went through it several times.
If i want do intra-day trading, then how much should be the figure in place “5” as per the time frame the trader will use? Is it that, if i am observing 5 min candle then the figure will be five?
how to pick at the start price and end price? Are these the figures of previous day or on the day of trading? and exactly what?
Hi Shah,
You need to manually detect Wave 1 and fill in the details in the Excel. The value 5 signifies number of candles Wave 1 lasted, it is independent of the timeframe you are trading. Similarly, Start and End price signifies the start and end price of wave 1 which you need to manually observe and enter.
link missing. not available for download please clearly show where it is. too much of nuisance.
Hi Prashant,
You may find the download link at the end of the post
Not able to download
Hi Leslie,
Are you getting any error while downloading? Please send the screenshot to support@tradingtuitions.com
Elliot wave excell
Hi
thanks a lot
I don’t understand the meaning and difference between 5 candle and 200 candle in daily chart.
5 days and 200 days in time frame????
That’s right, it refers to 5 and 200 days in daily timeframe