Summer School Flashcards

1
Q

Who is the founder of the Elliot Wave Theory?

A

Ralph Nelson Elliott

2
Q

What do you call the repetitive upward and downward price swings caused by the market’s collective psychology?

A

waves

3
Q

The Elliott Wave Theory was first published in a book entitled ______.

A

The Wave Principle

4
Q

Waves 2 and 4 are called ________ waves.

A

corrective

5
Q

Waves 1, 3, and 5 are called _______ waves.

A

motive

6
Q

People started labeling the ____ wave as the extended one as it tends to be longer than the other motive waves.

A

third

7
Q

There are ____ types of ABC corrective patterns.

A

21

8
Q

True or False: Triangle ABC corrective patterns are simple sideways corrective waves.

A

False

9
Q

True or False: A Minor wave is made up of Minute waves.

A

True

10
Q

What does TRUNCATION mean?

A

Wave 5 does not move beyond the end of Wave 3

11
Q

Wave 2 cannot go beyond the start of Wave 1.

A

Always true

12
Q

Waves 2 and 4 bounce off Fibonacci retracement levels.

A

Sometimes true

13
Q

The first wave in the 5-3 wave pattern is called the _______.

A

Impulse wave

14
Q

Name the three fundamental corrective wave patterns.

A

flats, zig-zags, and triangles

15
Q

What do you call the three legs of a Three-Drive pattern?

A

Drives

16
Q

Which trading tool should you use to spot ABCD and Three-Drive patterns?

A

Fibonacci

17
Q

How does the Gartley Pattern differ from the ABCD Pattern?

A

A Gartley Pattern is an ABCD Pattern preceded by a significant high or low

18
Q

A harmonic price pattern that allows you to put a very tight stop loss, and is considered the most accurate.

A

Crab

19
Q

Discovered by Byrce Gilmore, this harmonic price pattern is defined by the .786 retracement of move AB with respect to move XA

A

Butterfly

20
Q

A harmonic price pattern defined by the .886 retracement of move XA as Potential Reversal Zone.

A

Bat

21
Q

Which of the following is NOT a harmonic price pattern?

A

The Carney Pattern

22
Q

What do you do after you locate a potential harmonic price pattern?

A

Measure the potential harmonic price pattern

23
Q

Divergences can be spotted by comparing…

A

price action and an indicator

24
Q

What are the two types of divergences?

A

Regular and Hidden

25
Q

Which type of divergence usually signals a trend reversal?

A

Regular Divergence

26
Q

In a regular bullish divergence, if price is making lower lows, the oscillator should be making..

A

higher lows

27
Q

What kind of divergence is formed when price makes higher highs while the oscillator makes lower highs?

A

Regular bearish divergence

28
Q

Why are hidden divergences called such?

A

Because they are hiding in the current trend

29
Q

What do hidden divergences signal?

A

Trend continuation

30
Q

In a hidden bearish divergence, if price is making lower highs, the indicators should be making..

A

Higher highs

31
Q

When do hidden bullish divergences normally form?

A

Uptrend

32
Q

Which among these shouldn’t be combined with divergence trading?

a. Candlesticks
b. Trend lines
c. Support and resistance
d. None of the above

A

None of the above

33
Q

Which is part of the momentum trick in confirming a divergence?

A

Both

34
Q

True or False: If both price and the oscillator break their respective trend lines, it could indicate that a new trend is forming.

A

True

35
Q

In order for a divergence to exist, price must’ve formed either of the following except:

a. Double Top
b. Higher highs
c. Consolidation

A

Consolidation

36
Q

True or False: It’s okay if the bottoms or tops you connect aren’t consecutive. As long as one is higher or lower, it’s a valid divergence.

A

False

37
Q

True or False: In looking for divergences, you should focus on the tops and bottoms and forget about everything else.

A

True

38
Q

Which among these isn’t one of the “9 Rules for Trading Divergences”?

a. Must use stochastics only as the indicator
b. Draw lines on successive tops and bottoms
c. Keep in line

A

Must use stochastics only as the indicator

39
Q

True or False: Divergences should be used as an indicator, not as a signal to enter a trade.

A

True