Elliot Oscillator is an alternative MACD with the setting of 5-period and 34-period simple moving average.
The most important single idea about the Elliott Oscillator is that the highest/lowest point of the Oscillator is connected to the bullish/bearish Wave 3 of a bigger trend. This is because the momentum in Wave 3 is always the most impulsive.
Following the preceding highest/lowest point, Wave 4 crosses the zero line in the opposite direction of the trend. Wave 5 often makes a new high or low price for the swing but diverges from the Oscillator. It is consistent with most of other momentum indicators on idea about divergence.
Furthermore, when the suspected Wave 5 makes a new extreme price simultaneously with a new Oscillator extreme point, then it is considered not a Wave 5.
Fake Wave 5 often happens with intraday chart setting. Then chartists could read the price as in the Wave 3 extension.
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