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Elliot Wave

The document discusses the principles of Elliot Wave theory including the basic 5 wave pattern, rules for different types of motive and corrective waves such as impulse, extension, zigzag, flat and triangle patterns. It also covers guidelines on equality, alternation, depth, channeling, volume and use of Fibonacci in wave analysis.

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231 views

Elliot Wave

The document discusses the principles of Elliot Wave theory including the basic 5 wave pattern, rules for different types of motive and corrective waves such as impulse, extension, zigzag, flat and triangle patterns. It also covers guidelines on equality, alternation, depth, channeling, volume and use of Fibonacci in wave analysis.

Uploaded by

albedoenterprises
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Elliot Wave principles

• Wave principle is continuous

• Basic 5 wave pattern that moves the market

• 3-wave corrective sequence

• Fractal nature

• Rules
Types of Motive Wave - Impulse

Rules:

• Wave 2 never goes beyond start of wave 1


• Wave 3 is never the shortest motive wave
• Wave 4 never enters the price territory of wave 2
Impulse wave structure

5,3,5,3,5
Types of Motive Wave - Extension

• Usually one the motive wave will


extend further into 5 wave pattern

• With this extended move you can


expect a 9 wave pattern

• When a wave is extended, others


tend to be equal in length

• Double extension
( 5,3,5,3,5,3,5,3,5)
Types of Motive Wave - Extendes

Rules:

• Wave 2 never goes beyond start of wave 1


• Wave 3 is never the shortest motive sub-wave
• Wave 4 never enters the price territory of wave 2
Extended wave structure

5,3,5,3,5,3,5,3,5
Types of Motive Wave - Truncated

• Occurs when wave 5 fails to


terminate beyond wave 3

• Often preceded by exceptionally


strong wave 3

• Often follows by sharp and swift


reversal
Types of Motive Wave - Leading Diagonal

• Leading diagonal - Wave 4 enters


the territory of wave 2

• After leading diagonal wave 5,


there is usually deeper correction

5,3,5,3,5
Types of Motive Wave - Leading Diagonal

Rules:

• Wave 2 never goes beyond start of wave1


• Wave 3 is usually the longest but never the shortest of 1-3-5. It
can be shorter than 1 or 5 but never the shortest

• Wave 4 must hold above start of wave 2


Types of Motive Wave - Ending Diagonal

• Ending diagonal appears at the en do


the wave 5 or c

• 5 wave structure moving in the


direction of market

• 4th wave need to test the territory of


2nd wave

• Inside each leg o the wave there will


be a smaller correction ( 3 wave), that
makes it 5 correction in the direction
of larger trend
Types of Motive Wave - Ending Diagonal

Rules:

• Wave 2 never goes beyond start of wave 1


• Wave 3 is usually the longest but never the shortest of 1-3-5. It
can be shorter than 1 or 5 but never the shortest

• Wave 4 must end above start of wave 2


Corrective Wave

• A three wave move against the trend

• Retrace part of the preceding wave

• Three type we will label these patterns using the letters A, B, and
C. From the three waves, waves A and C will move in
the same direction, and that’s usually going to be
• Zigzag against the larger trend, and wave B will be the
correction in the middle.
• Flat

• Triangle
Zig-Zag Correction( 5,3,5)

• A Simple 3 wave structure A-B-C

• Wave A & C are motive in nature with 5 sub waves and


B is correction with 3 waves

• In a Zig-Zag we have 5 waves in A, 3 waves in B, and 5


waves in C (5-3-5).

• Within a Zig-Zag C is usually going to be equal in size


to wave A, while in a motive phase, Wave 3 is usually
the longest wave
Zig-Zag Correction - Rules

• Wave B must end below the start of the wave A

• Wave C must break below the end of wave A

• After this correction we see an impulsive wave


move downwards
Flat Correction( 3,3,5)

• A Simple 3 wave structure A-B-C

• Wave A & B are corrections in nature with 3 sub waves


and C is Motive wave with 5 waves in the final leg.

• Wave B to test at least 90% of wave A

• 3 Patterns in Flat Group

• Regular

• Expanding

• Running
Flat Correction( 3,3,5)

Regular Flat Expanding Flat Running Flat

• Wave B ends between the • Wave B ends between the


• Wave B must retrace to
inverse of 123.6% to 161.8%
90% of Wave A inverse of 123.6% to 161.8%
of Wave A - not beyond that
of Wave A - not beyond that
• Wave C must end below
• Wave C must end below the • Wave C must end above the
the end level of Wave A
end level of Wave A
end level of Wave A
Combination Waves- Double 3 or Triple 3
Combination Waves- Double 3 or Triple 3
Combination Waves- Double 3 or Triple 3
Functions & Modes

Two types of Functions for each wave :

1. Actionary Wave

2. Reactionary wave

Two modes for each wave :

1. Motive Wave

2. Corrective wave
Functions & Modes

Label for actionary waves are : 1,3,5,A, C, E, W, Y & Z

Label for reactionary waves are: 2, 4, B, D & X

Most actionary waves appear in Motive waves, and Reactionary waves in corrective waves
Functions & Modes

Rules:

• Only wave 1,3,5 in ending diagonal

• Wave A in flat correction

• Wave A, C E in a triangle

• Wave W and Y in double zigzag or double three

• Wave Z in triple zigzag or triple 3


RULES
Fundamental rules

Rules:

• Wave 3 can never be the shortest of 1,3, & 5

• Wave 2 can never retrace more than 100% of wave A

• The end of wave 4 ca never overlap the orthodox end of wave 1

• No port of wave 4 can enter the prices territory of wave 1 or wave 2


GUIDELINES
EQUALITY

1. 2 of motive waves in a 5 wave sequence will tend towards equality in terms of


magnitude and time.

2. This is generally seen in two non extended waves


Alternation-Impulse

1. Within an impulse wave if wave 2 is a sharp correction then expect wave to be a


sideways, and vice versa

2. Sharpe corrections never include new price extreme: Zigzag

3. Sideways correction generally includes a new price extreme: like Flat, triangle or
combinations

4. Diagonal tringle do not display rule of alternation in subways 2 and 4.


Alternation-Corrective
1. Within corrective wave:

1. If a correction begins with a flat a-b-c


structure for wave A, then expect a zigzag
abc structure for wave B and vice versa.

2. If a large correction begins with a simple


abc zigzag in wave A, then expect a stretch
out wave B into a more complex structure
Depth of corrective wave

1. Corrections, Specially the 4th wave, correction


will end at the level or around the level of
previous 4th wave termination point od one
lesser degree.
Channeling in Impulse waves
Channeling in Impulse waves
Channeling in Impulse waves
Throwover - Throwunder
Volume

1. Volume in wave 3 will be greater then volume in wave 5

2. If wave 5 volume is greater then or equal to volume in wave 3, wave 5 can be an


extended wave

3. Volume in corrective waves will be lesser then in impulse waves


Post triangle thrust measurement
FIBONACCI & WAVES
FIBONACCI & WAVES
FIBONACCI & WAVES
FIBONACCI & WAVES
FIBONACCI & WAVES
FIBONACCI & WAVES
FIBONACCI & WAVES
FIBONACCI & WAVES

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