kaloysterrrrr
2022/08/24 16:46
Elliot Wave Theory Rules
An impulse consists of 5 internal waves.
Wave 1 and 5 always have to be an impulse, or a diagonal (Leading for wave 1 – Ending for wave 5)
Wave 3 always has to be an impulse.
Wave 3 can never be the shortest wave
It can be shorter than wave 1 or 5, but never the shortest
Wave 2 cannot retrace more than 100% of wave 1
Wave 2 can be any corrective pattern
Except a triangle
Wave 4 can be any corrective pattern
Wave 4 can never move beyond the end of wave 1 (Otherwise it is a diagonal)
Guidelines:
Wave 1 is the least common wave to extend
Wave 5 should end with momentum divergence (RSI is the simplest oscillator to spot this)
Wave 5 can fail to go beyond the end of wave 3
This is called truncation, but it is not very common
Truncation gives warning of underlying weakness or strength in the market
Wave 3 usually has the greatest extension
Occasionally two waves will extend
Never will all three waves extend
When wave 3 extends, wave 5 tends to equal wave 1 in length
Waves 2 and 4 tend to create alternation between each other
See last page for more details on alternation
Wave 2 typically retraces to deeper levels of wave 1, than wave 4 does relative to wave 3
Wave 2 usually forms as a zigzag or double/triple zigzag
Wave 4 usually forms as a triangle, double/triple threes, or flat
Extended waves can contain exaggerated subdivisions within them
Usually two of waves 1, 3 & 5 exhibit a Fibonacci ratio
Channel lines and Fibonacci targets are inferior to the wave count
In most cases, wave 3 has the highest volume
If volume during the 5th wave is as high as the 3rd, an extended 5th wave is expected.
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#How to make money in the bear market?
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