Elliott Wave Principle Basics

Motive Wave: 

 Elliott-wave Basic Fractal Pattern

Rules:

• Impulsive Waves always divide into 5 waves: Waves 1,2,3,4,& 5; followed by a corrective wave, typically A, B & C.
• The waves that are numbered (1,2,3,4,5) are in the direction of the Trend.
• The waves that are Lettered (A, B, C ) are against the Trend.
• Structure = 5-3-5-3-5 (21) followed by 5-3-5 (13)
• Wave 1 could divide into an impulsive 5 wave or a Leading Diagonal.
• Wave 3 is always an Impulsive 5 wave and is never the shortest wave.
• Waves 5 & C are always 5 waves but it could be an Ending Diagonal.
• Wave 2, 4 and B always subdivide in 3 wave corrections.
• Wave 2 Never moves beyond origin of Wave 1.
• Wave 3 must go beyond Wave 1.
• Wave 4 never moves into wave 1 range.
• Wave A can be a three wave structure or Leading Diagonal.
• Wave 5 often goes beyond Wave 3, if not it is called "Truncation".
• The Chart shows a bull Market. For a Bear Market the chart can be flipped and all the rules remain the same.
• The same pattern can be viewed in all time frames: Thick Charts, 1 min, 2 min, 3 min, 5 min, 10 min, 15 min, 30 min, 1 h, 4h, Daily, Weekly, Monthly Charts etc...

Guidelines:

• Waves 2 & 4 will almost always Alternate into ZigZags, Flats, or Combos.
• Wave 4 can be Flats, Triangles or Combinations 
• Wave 2 which is usually ZigZag or a ZigZag combination.
• Wave 4 Usually Terminates in the same area as the Previous Wave 4 of Wave 3.
• Typical Fib counts for Wave 2 is 50%, 61.8% of Wave 1.
• Typical Fib Count of Wave 4 is 38.2% or 61.8% of wave 3.
• See the charts for other Fibonacci relations.
• Often Waves ad-hear to the laws of Channeling:
• 5 ends around the Chanel line extension of endpoints of 1-3, and
• Wave 4 may end at the parallel line point 1-3. (please look at the charts)

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