Elevate Your Elliott Wave Analysis
By Elliott Wave International
RULES are great. They tell you what you can’t do. The Elliott Wave Principle has three.
In a five-wave impulse (shown in the chart below):
- Wave 2 can never retrace more than 100% of wave 1
- Wave 3 can never be the shortest of waves 1, 3 and 5
- Wave 4 can never end in the price territory of wave 1
But GUIDELINES tell you what’s PROBABLE. And that’s what you want to know!
For instance, the guideline of alternation states that if wave two of an impulse is a sharp retracement, expect wave four to be a sideways correction, and vice versa. The chart below illustrates.
Sharp corrections are almost always zigzags (single or double). Sideways corrections include flats, triangles and combinations.
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