elliott-wave

# Elliott Wave Theory ## Purpose Classic wave theory based on the core assumption that markets move in fractal wave structures: | Structure | Wave Count | Direction | Meaning | |------|------|------|------| | Impulse wave | 5 waves (1-2-3-4-5) | Trend-following | Main trend direction | | Corrective wave | 3 waves (A-B-C) | Counter-trend | Pullback correction | ## Core Rules ### Three Iron Rules for Impulse Waves 1. Wave 2 cannot retrace beyond the start of wave 1 2. Wave 3 cannot be the shortest impulse wave 3. Wave 4 cannot enter the price territory of wave 1 ### Fibonacci Relationships Between Waves - Wave 2 retraces 0.5-0.618 of wave 1 - Wave 3 = wave 1 × 1.618 (most common) - Wave 4 retraces 0.382 of wave 3 - Wave 5 ≈ the length of wave 1 ## Signal Logic - **5-wave advance completed** → sell (trend top) - **ABC pullback completed** → buy (correction finished) - **Wave 3 in progress** → stay with the trend (no reversal signal is generated) ## Parameters | Parameter | Default | Description | |------|--------|------| | swing_window | 10 | Rolling window for swing-point detection | | fib_tolerance | 0.15 | Tolerance for Fibonacci ratios | | min_wave_bars | 5 | Minimum number of candles per wave | ## Notes Wave theory is highly subjective, and automatic counting can yield multiple interpretations. This implementation uses a "simplest effective single interpretation" strategy and would rather miss signals than misclassify them. ## Dependencies ```bash pip install pandas numpy requests ``` ## Signal Convention - `1` = long, `-1` = short, `0` = stand aside