Elliott Wave

Fractals
 Each Wave will be
shown in both a
bullish uptrend
(above) and a bearish
downtrend (below)
Motive Impulse
Waves
(Price moves
in direction of Diagonal
trend)
Impulse
• Rule 1) Wave 1 cannot
retrace more than 100%

• Rule 2) Wave 3 cannot be the

shortest wave

• Rule 3) Wave 4 cannot

overlap wave 1 (except in a
diagonal)
 Impulse vs
Corrective
waves
• Impulse waves
• Waves 1,3 and 5
• Subwave count – 5 waves
• Higher volume (especially wave 3)

• Corrective waves
• Waves 2 and 4
• Subwave count – 3 waves
• Reducing volume (particularly in
triangles)
• Alternating complexity between waves 2
and 4
Start (Wave 1 )
and End (Wave 5)

• Momentum divergence
• Sentiment reaches extremes
• Increased media attention
Wave 2
• Retraces typically 50-61.8% of
Wave 1
• Rule – Cannot retrace > 100%
of Wave 1
• Often made up of a Zig-Zag
• News and Fundamentals still
in keeping with Start of
Impulse
• Previous major trend is still
considered strong
Wave 3
• Usually the most powerful wave
• Rule – cannot be the shortest
wave
• Change in media and
fundamentals (completely
reverse by end of wave 3)
• Shallow pullbacks
Wave 4
• Will often retrace to the level of
wave 4 of 1 lesser degree of the
preceding wave 3
• Profit taking wave
• Preceded by loss of momentum
and volume from wave 3
• Reduced Media coverage
• Rule – cannot overlap with wave
1
• Typically retraces 38.2 -50% of
wave 3
• Usually the longest duration
wave
Diagonal
• Occur infrequently
• Wedge Shape
• Leading diagonal: Waves 1 and A
• Subwave count: 5,3,5,3,5
• Ending Diagonal: Waves 5 and C
• Subwave count: 3,3,3,3,3
• Often associated with an
overthrow outside of the wedge,
at the terminal end of the
diagonal
• Wave 4 overlaps with wave 1
Wave 4
• Will often retrace to the level of
wave 4 of 1 lesser degree of the
preceding wave 3
• Profit taking wave
• Preceded by loss of momentum
and volume from wave 3
• Reduced Media coverage
• Rule – cannot overlap with wave
1
• Typically retraces 38.2 -50% of
wave 3
• Usually the longest duration
wave
Zig-Zag
• Very common
• Subwave count: 5,3,5
• Sharp correction (as opposed
to sideways correction)
• A is often equal in length to C
Flats
• Common
Regular
• Subwave count: 3,3,5
• Often seen when
underlying trend is
strong Running
• Sideways correction,
typically seen in Wave 4

Expanded
Regular Flat
• Forms a rectangular trading
range
• Wave B reaches price of the
preceding impulse wave
• Wave C retraces to the same
price as Wave A
• Upon completion, it provides
a good horizontal price level
to place a stop, below the A
and C wave
Running Flat
• B wave finishes slightly
beyond the preceding
impulse wave, due to a strong
major trend
• Wave C fails to retrace to the
price of Wave A
• Wave B does not usually
extend more than 138.2% of
Wave A
• Wave C is usually equal to
Wave A
Expanded Flat
• Each Wave gets slightly longer
than the one before it
• B wave finishes slightly
beyond the preceding
impulse wave, due to a strong
major trend
• Wave B does not usually
extend more than 138.2% of
Wave A
• Wave C Retraces more than
Wave A and often up to
161.8% of Wave A
Triangles
• Common Symmetrical
• Sideways correction,
typically seen in Wave 4
• Subwave count:
3,3,3,3,3
• Each wave gets
Ascending
increasingly shorter
• Often seen when
underlying trend is
strong Descending
• Volume continuously
reduces during the
triangle
Symmetrical
Triangle
• Falling Tops and Rising
Bottoms
• Supply is equal to Demand
Ascending
Triangle
• Rising Bottoms and Flat Tops
• Seen due to Demand
exceeding Supply
• More common in a Bull
market with a breakout to the
upside
Descending
Triangle
• Falling Tops and Flat Bottoms
• Seen due to Supply Exceeding
Demand
• More common in a Bear
market with a breakout to the
downside
Complex
Corrections
WXY
Often occurs as a market
is awaiting more
information, e.g before
some scheduled news or
whilst waiting for a
correlated market to
complete its correction
WXYXZ
WXY
• Common
• Subwave count: 3,3,3
• 2 corrective waves (W,Y), separated by an X
wave
• X wave is a corrective wave of a lesser
degree
• Waves W,X and Y can be made up of any
type of correction(But W Wave cannot be a
triangle – as triangles only occur as a final
correction in a complex correction or
within an X Wave)
• Often occurs as a market is awaiting more
information, e.g before some scheduled
news or whilst waiting for a correlated
market to complete its correction
• Commonly presents as a Double Zig-Zag
Ascending
Triangle
• Rising Bottoms and Flat Tops
• Seen due to Demand
exceeding Supply
• More common in a Bull
market with a breakout to the
upside