How Can I Defines Peaks and Troughs for Elliott Wave Counts?

Chartists can use the Zigzag indicator to quantify price movements and identify significant peaks and troughs. The peaks and troughs can then be used to apply an Elliott wave count. The chart below shows the S&P 500 ETF (SPY) with a 3 percent Zigzag (red line) and a 2 percent Zigzag (dotted blue line). The red line shows price moves that are 3% or more, while the dotted blued line shows price moves that are 2% or more. Chartists can use the red line for a larger degree wave count and the blue dotted line for a smaller degree wave count. Based on this count, it looks like SPY just completed a five wave advance, which means we may be embarking on a corrective sequence now. You can read more about the Zigzag in our ChartSchool.

 Click this image for a live chart.
Arthur Hill
About the author: , CMT, is a Senior Technical Analyst at He has written articles for numerous financial publications including Barrons and Stocks & Commodities magazine. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed technician. In addition to his CMT designation, Arthur holds an MBA from the Cass Business School at City University in London. Learn More
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Trying to determine the waves in Elliot Waves is the best way to end up in padded cell wrapped in a straightjacket.
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