A lot of traders are under the impression that technical analysis will give cut and dried answers to their trading challenges. Many of those who practice Elliot wave analysis also have this notion. How I wish life was so simple! All that technical analysis does is to give you a structured approach to the market. It allows you to enter the market at levels where you can define your stop loss levels, and take an informed view about how far the next move can go. It is ALWAYS an exercise in probability. As you gain experience, you become better at the game, and make less frequent incorrect calls. A good wave analyst is not so much concerned about incorrectly labeling a move provided he has the ability to ‘think’ on his feet. ie. he constantly adjusts his count as the market sends him new signals. Even if he identified the end of a trend incorrectly, he would have made the correct call about the likely next direction, unless he was ‘wrong – WRONG”.
With that short background, I present you the chart of Citi, showing how I labeled the end of the trend incorrectly on 3 different times in the past, yet ended up making money. (The one time I lost was when what seemed like a diagonal triangle turned out to be something else, but even that gave me a decent level to exit the following day)