Elliott Wave Oscillator Signals by DGT

Elliott Wave Principle, developed by Ralph Nelson Elliott , proposes that the seemingly chaotic behaviour of the different financial markets isn’t actually chaotic. In fact the markets moves in predictable, repetitive cycles or waves and can be measured and forecast using Fibonacci numbers. These waves are a result of influence on investors from outside sources primarily the current psychology of the masses at that given time. Elliott wave predicts that the prices of the a traded currency pair will evolve in waves: five impulsive waves and three corrective waves. Impulsive waves give the main direction of the market expansion and the corrective waves are in the opposite direction (corrective wave occurrences and combination corrective wave occurrences are much higher comparing to impulsive waves)

The Elliott Wave Oscillator ( EWO ) helps identifying where you are in the 5-3 Elliott Waves , mainly the highest/lowest values of the oscillator might indicate a potential bullish / bearish Wave 3. Mathematically expressed, EWO is the difference between a 5-period and 35-period moving average based on the close. In this study instead 35-period, Fibonacci number 34 is implemented for the slow moving average and formula becomes ewo = ema (source, 5) - ema (source, 34)

The application of the Elliott Wave theory in real time trading gets difficult because the charts look messy. This study (EWO-S) simplifies the visualization of EWO and plots labels on probable reversals/corrections. The good part is that all plotting’s are performed on the top of the price chart including a histogram (optional and supported on higher timeframes). Additionally optional Keltner Channels Cloud added to help confirming the price actions.

What to look for:
Plotted labels can be used to follow the Elliott Wave occurrences and most importantly they can be considered as signals for possible trade setup opportunities. Elliott Wave Rules and Fibonacci Retracement /Extensions are suggested to confirm the patters provided by the EWO-S

Trading success is all about following your trading strategy and the indicators should fit within your trading strategy, and not to be traded upon solely

Disclaimer: The script is for informational and educational purposes only. Use of the script does not constitutes professional and/or financial advice. You alone the sole responsibility of evaluating the script output and risks associated with the use of the script. In exchange for using the script, you agree not to hold dgtrd TradingView user liable for any possible claim for damages arising from any decision you make based on use of the script

Notas de Lançamento: non-repaint with alert added version

Notas de Lançamento: backtest ability added, try to optimize by changing the setting

non-repaint version made optional (default repaint version)

Notas de Lançamento: exit price calculation error fixed when stop loss condition meets

many many thanks for your highly valuable comments @sotiri 🙏

Notas de Lançamento: removed "Enable Non-repaint Version" option and made Alerts and BackTest Non-Repaint

Entry/Exit Price Assumption default value changed from hlc3 to close