Part 02 - Elliott Wave (Rules and Guidelines)

Part 02

 Elliott Wave ~ Rules and Guidelines

 Diagonal 

(3-3-3-3-3 or 5-3-5-3-5) 

Rules

 - A diagonal always subdivides into five waves (1-2-3-4-5). 

- Wave 4 never moves beyond the end of wave 2. 

- Wave 4 always moves into the price territory of wave 1.

- In the contracting form, wave 5 is shorter than wave 3, wave 3 than wave 1 and wave 4 than wave 2. 

- A line drawn between the ends of waves 2 and 4 converges towards (in the contracting form) or diverges from (in the expanding form) a line drawn between the ends of waves 1 and 3. 

Guidelines 

- Waves 2 and 4 usually retrace 62 to 80 % of the previous wave. 

Ending Diagonal (3-3-3-3-3) 

Rules 

- An ending diagonal is always a wave 5 of an impulse or a wave C of a zigzag or flat. 

- All waves subdivide into zigzags. 

Guidelines 

- Wave 5 usually end beyond the end of wave 3 (if not it’s called truncation).