Elliott Wave with Supertrend Exit - Strategy

The Elliott Wave with Supertrend Exit indicator is an automated trading tool designed to detect, validate, and trade Elliott Wave patterns. By algorithmically identifying impulsive and corrective formations using Zigzag pivots and Fibonacci ratios, it eliminates the subjectivity often associated with manual wave counting and provides systematic entry and exit signals.

Usage

This strategy is best utilized on charts with clear structural trends. Users should typically start with higher timeframes, such as daily or weekly, to identify the primary trend before drilling down into lower timeframes for execution.

• Bullish Signals: A long entry is triggered when a new validated 5-wave impulsive bullish pattern is identified.
• Bearish Signals: A short entry is triggered when a new validated 5-wave impulsive bearish pattern is identified.
• Exit Logic: Trades are closed when the Supertrend reverses (e.g., a downturn for longs or an upturn for shorts), when a wave pattern is invalidated, or when a fixed stop-loss percentage is hit.

Details

The script executes a multi-step logic to ensure pattern reliability:

1. Pivot Detection: Uses a Zigzag indicator to find significant swing highs and lows.
2. Impulsive Validation: Checks that Waves 1, 3, and 5 do not overlap and that Wave 3 is not the shortest, adhering to core Elliott Wave rules.
3. Corrective Validation: Identifies overlapping 3-wave patterns (ABC) that retrace the prior impulse within specific Fibonacci zones.
4. Trade Management: Automatically manages positions by scaling out at Fibonacci extensions and trailing stops behind key swing points.

Settings

ZigZag

• Length: Determines the number of bars required to identify a new pivot high or low. Higher values result in more significant, longer-term waves.
• Source [high - low]: Allows selecting the price source for pivot detection (High/Low, Close, or Extremes).

Exit condition: Supertrend

• Supertrend Multiplier: Adjusts the sensitivity of the Supertrend exit; a higher multiplier provides more breathing room for the trend.
• Supertrend Length: Sets the ATR lookback period used for the Supertrend calculation.

Stoploss: Fix percentage

• Stop Loss Percentage (%): Sets a hard percentage-based stop loss from the entry price to manage risk.

Fibonacci values

• Levels 1-4: Customizable Fibonacci retracement and extension levels used for pattern validation and profit targets.

FAQ

How do I access the Elliott Wave with Supertrend Exit?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

Can I use this for both Long and Short trades?

Yes, the "Trading Direction" setting allows you to toggle between Long, Short, or Both, depending on your market bias.

What happens if a wave pattern fails?

The strategy includes an "Invalidation" logic. If price action violates the rules of a confirmed wave (such as Wave 4 overlapping Wave 1), the pattern is invalidated and the strategy will signal an exit or stop further signals until a new valid pattern forms.