Elliott Wave ~ Rules and Guidelines
Motive Waves
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.
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.
- 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).
- 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).
Leading Diagonal (3-3-3-3-3 or 5-3-5-3-5)
Rules
- A leading diagonal is always a wave 1 of an impulse or a wave A of a zigzag.
- Waves 2 and 4 subdivide into zigzags.
- Wave 5 ends beyond the end of wave 3.
Guidelines
- Waves 1, 3 and 5 are usually zigzags but can also be impulses.
- A leading diagonal is always a wave 1 of an impulse or a wave A of a zigzag.
- Waves 2 and 4 subdivide into zigzags.
- Wave 5 ends beyond the end of wave 3.
Guidelines
- Waves 1, 3 and 5 are usually zigzags but can also be impulses.
Corrective Waves
Rules
- A zigzag comprises three waves (A-B-C).
- Wave A is an impulse or leading diagonal.
- Wave B can be any corrective pattern.
- Wave B never goes beyond the start of Wave A.
- Wave C is an impulse or ending diagonal.
Guidelines
- Waves A and C are usually impulses.
- Wave C often equals wave A and therefore ends almost always beyond the end of Wave A.
- Wave B usually retraces between 38 and 50 % of wave A
- A line drawn between the ends of waves A and C is often parallel to a line drawn between the starts of wave A and C.
Flat (3-3-5)
Rules
- A flat comprises three waves (A-B-C).
- Wave B retraces at least 70 % of wave A.
- Wave C is an impulse or ending diagonal.
Guidelines
- Wave B usually retraces between 100 and 138 % of wave A.
- Wave C is usually 100 to 162 % as long as wave A.
- Wave C usually ends beyond the end of wave A.
- A flat comprises three waves (A-B-C).
- Wave B retraces at least 70 % of wave A.
- Wave C is an impulse or ending diagonal.
Guidelines
- Wave B usually retraces between 100 and 138 % of wave A.
- Wave C is usually 100 to 162 % as long as wave A.
- Wave C usually ends beyond the end of wave A.
Triangle (3-3-3-3-3)
Rules
- A triangle subdivides into five waves (A-B-C-D-E), whereof at least four of them are zigzags.
Contracting Triangle
Rules
- Waves C, D and E never move beyond the end of the preceding same-directional wave.
- A line drawn between the ends of waves B and D converges with a line drawn between the ends of waves A and C.
Guidelines
- When wave B ends beyond the start of wave A it’s called a running triangle (about 40 % of all triangles).
Barrier Triangle
Rules
- Waves B and D end at the same level.
Expanding Triangle
Rules
- Waves C, D and E move beyond the end of the previous same-directional wave.
- A line connecting the ends of waves B and D diverges from a line drawn between the ends of waves A and C.
Guidelines
- Waves B, C and D usually retrace between 100 and 125 % of the previous wave.
Combinations
Rules
- Combinations subdivide into two or three corrective patterns (labeled W, Y and Z) that are separated by one or two corrective patterns in the opposite direction (labeled X).
Guidelines
- When a zigzag or flat seems to be too small to be the entire correction, it’s likely to get a combination.
