Part 01 - Elliott Wave (Rules and Guidelines)

Part 01

 Elliott Wave ~ Rules and Guidelines

Motive Waves 

Impulse (5-3-5-3-5) 

Rules 

- An impulsive wave always subdivides into five waves (1-2-3-4-5). 

- Wave 1 usually subdivides into an impulse or seldom into a leading diagonal. 

- Wave 3 subidivides into an impulse. 

- Wave 3 always moves beyond the end of wave 1. 

- Wave 3 is never the shortest wave.

 - Wave 5 subidivides into an impulse or an ending diagonal.

 - Wave 2 subidivides into a zigzag, flat or combination. 

- Wave 2 never moves beyond the start of wave 1. 

- Wave 4 subidivides into a zigzag, flat, triangle or combination.

 - Wave 4 never moves into the territory of wave 1.

Guidelines

 - Wave 1, 3 or 5 is usually extended, while wave 1 is the least commonly extended wave. 

- If wave 3 is extended, it’s common for subwave 3 of 3 to extend as well (the same applies for wave 1 and 5). 

- Subwave 3 of 3 almost always has the steepest slope within the parent impulse. 

- Wave 5 often ends when hitting a line drawn from the end of wave 1 or 3 that is parallel to a line drawn between the ends of waves 2 and 4. 

- Wave 5 normally ends beyond the end of wave 3, if not it’s called a truncation. 

- If wave 2 was a sharp correction, wave 4 will almost always be a sideways correction and vice versa (Alternation). 

- Wave 2 is usually a zigzag or zigzag combination. 

- Wave 4 is ususally a flat, triangle or combination thereof. 

- Wave 4 usually ends within the price territory of the fourth wave of wave 3.