Elliott Waves are one of the strongest tools for technical analysis to identify major trends in financial markets. Wave 3 is considered the strongest and most profitable, and in this cheat sheet, we will cover conservative buy and sell setups to effectively capitalize on this wave.

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## 📈 Conservative Buy Setup for Wave 3 (Wave 3 Buy Conservative Setup)

### ⚙️ Pre-Trading Requirements:

1. Overall trend is bullish (Bullish Trend) – The upward movement should be confirmed on the higher timeframe.

2. Wave (1) consists of 5 sub-waves – according to the rules of the motive phase.

3. (Optional) Divergence on RSI between waves 3 and 5 – indicates weakening momentum at the end of wave (1).

### 🎯 How to Execute the Trade:

✔ Entry Point:

- Draw Fibonacci retracement from the start to the end of wave (1).

- Place a buy limit order at the 50% level.

✔ Stop Loss:

- Place SL at the start of wave (1) (below the bottom of the retracement).

✔ Take Profit:

- Use Fibonacci extension from the start of wave (1) to its end, then pull it to the end of wave (2).

- TP1: 100% (Extends equal to wave 1).

- TP2: 161.8% (Golden Extension).

### 💡 Additional Tips:

- Move SL to entry point (Break Even) after achieving TP1.

- Close the entire trade if 5 sub-waves appear within wave 3.

- Risk management: Do not risk more than 1-2% of capital.

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## 📉 Conservative Sell Setup for Wave 3 (Wave 3 Sell Conservative Setup)

### ⚙️ Pre-Trading Requirements:

1. Overall trend is bearish (Bearish Trend) – Confirmation of downward movement on the higher timeframe.

2. Wave (1) consists of 5 sub-waves – within the motive phase.

3. (Optional) Divergence on RSI between waves 3 and 5 – a sign of weakening bullish momentum.

### 🎯 How to Execute the Trade:

✔ Entry Point:

- Draw Fibonacci retracement from the start to the end of wave (1).

- Place a sell limit order at the 50% level.

✔ Stop Loss:

- Place SL at the start of wave (1) (above the top of the retracement).

✔ Take Profit:

- Use Fibonacci extension from the start of wave (1) to its end, then pull it to the end of wave (2).

- TP1: 100% (Equal extension to wave 1).

- TP2: 161.8% (Golden Extension).

### 💡 Additional Tips:

- Move SL to entry point (Break Even) after achieving TP1.

- Use confirmation signals such as reversal candlestick patterns or trendline breaks.

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## 📌 Summary:

- Wave 3 is the strongest in Elliott's theory, often providing the best trading opportunities.

- The conservative setup is based on a 50% retracement as an ideal entry area.

- Combining Fibonacci with Elliott Waves increases the accuracy of identifying entry and exit points.

- Risk management is essential – do not risk more than 1-2% per trade.

Use this strategy with other confirmation tools such as moving averages or volume to improve results.