Elliott-Wave Principle Basics

 

 

 

 

Motive Wave: 

Elliott-wave Basic Fractal Pattern

proElliottWave.com Motive

 

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)

Impulse Wave Extensions

proElliottWave.com Impulsive Extension

Rules & Guidelines:

  • Same As Motive waves mentioned above:

Extended Guidelines:

  • Waves 1, 3 OR 5 can be subdivided further to be Extended.
  • When Extended, the subdivisions are exaggerated, resulting into an elongated Impulse .
  • Usually only one of the three (1,3, OR 5) is only Extended.
  • In case of "Cycle" and "Supercycle", both Waves 3 & 5 are Extended.
  • Waves 3 or 5 are the most common extensions.
  • If Wave three is Extended, then Waves 1 & 5 are usually proportionally similar.
  • If Wave 1 is Extended, then Wave 5 usually terminates around the Fibonacci 61.8% of Wave 1.
  • If Wave 5 is Extended, Then it usually terminates around the Fibonacci 161.8% of Wave 3.

Leading Diagonal

proElliottWave.com Leading Diagonal

Rules:

  • Diagonals are always 5 wave structures.
  • Structure = 3-3-3-3-3 or 5-3-3-3-3
  • Leading Diagonals happen in Wave 1 of an Impulse or Wave A of a ZigZag.
  • Wave 2 & 4 always subdivide in ZigZag corrections.
  • Wave 2 Never moves beyond origin of Wave 1.
  • Wave 3 must go beyond Wave 1.
  • Wave 4 must move into wave 1 range but not beyond Wave 2.
  • Wave 5 must go beyond Wave 3, there should be no "Truncation".
  • In Contracting Diagonals, Wave 3 is always shorter than Wave 1, Wave 4 Shorter than Wave 2, and Wave 5 shorter than Wave 3.
  • In Expanding Diagonals, Wave 3 is always longer than Wave 1, Wave 4 longer than Wave 2, and Wave 5 longer than Wave 3.

Guidelines:

  • Wave 1, 3 & 5 are usually divided in ZigZags but may also be an Impulse wave.
  • If Waves 1 is a Leading Diagonal, then Wave 3 is Usually Extended.
  • Connecting ends of Waves 1-3 and 2-4 form Contracting or Expanding Wedges.
  • In a Contracting Diagonal, Wave 5 Usually ends beyond the Wedge Line of Wave 1-3 ("Throw-Over") .
  • In an Expanding Diagonal, Wave 5 stops just short of reaching the Wedge Line of Wave 1-3.
  • Please see the chart for more favorable Fibonacci counts for possible Wave terminations.

 


Ending Diagonal

proElliottWave.com Ending Diagonal

Rules:

  • Diagonals are always 5 wave structures.
  • Structure = 3-3-3-3-3
  • Ending Diagonals happen in Wave 5 of an Impulse or Wave C of a ZigZag or Flat Corrections.
  • Wave 1, 2, 3, 4 & 5  always subdivide in ZigZag corrections.
  • Wave 2 Never moves beyond origin of Wave 1.
  • Wave 3 must go beyond Wave 1.
  • Wave 4 must move into wave 1 range but not beyond Wave 2.
  • Wave 5 Stop before reaching end of Wave 3: "Truncation".
  • In Contracting Diagonals, Wave 3 is always shorter than Wave 1, Wave 4 Shorter than Wave 2, and Wave 5 shorter than Wave 3.
  • In Expanding Diagonals, Wave 3 is always longer than Wave 1, Wave 4 longer than Wave 2, and Wave 5 longer than Wave 3.

Guidelines:

  • Wave 1, 3 & 5 are usually divided in ZigZags but may also be an Impulse wave.
  • In an Impulse, if Wave 3 is not an Extended, then Wave 5 is unlikely to become an Ending Diagonal.
  • Connecting ends of Waves 1-3 and 2-4 form Contracting or Expanding Wedges.
  • In a Contracting Diagonal, Wave 5 Usually ends beyond the Wedge Line of Wave 1-3 ("Throw-Over") .
  • In an Expanding Diagonal, Wave 5 stops just short of reaching the Wedge Line of Wave 1-3.
  • Please see the chart for more favorable Fibonacci counts for possible Wave terminations.

Expanding Diagonal

proElliottWave.com Expanding Diagonal

Rules:

  • Diagonals are always 5 wave structures.
  • Structure = 3-3-3-3-3
  • Ending Diagonals happen in Wave 5 of an Impulse or Wave C of a ZigZag or Flat Corrections.
  • Wave 1, 2, 3, 4 & 5  always subdivide in ZigZag corrections.
  • Wave 2 Never moves beyond origin of Wave 1.
  • Wave 3 must go beyond Wave 1.
  • Wave 4 must move into wave 1 range but not beyond Wave 2.
  • In an Expanding Ending Diagonal Wave 5 must go beyond the end of Wave 3: No "Truncation".
  • In Contracting Diagonals, Wave 3 is always shorter than Wave 1, Wave 4 Shorter than Wave 2, and Wave 5 shorter than Wave 3.
  • In Expanding Diagonals, Wave 3 is always longer than Wave 1, Wave 4 longer than Wave 2, and Wave 5 longer than Wave 3.

Guidelines:

  • Wave 1, 3 & 5 are usually divided in ZigZags but may also be an Impulse wave.
  • In an Impulse, if Wave 3 is not an Extended, then Wave 5 is unlikely to become an Ending Diagonal.
  • Connecting ends of Waves 1-3 and 2-4 form Contracting or Expanding Wedges.
  • In a Contracting Diagonal, Wave 5 Usually ends beyond the Wedge Line of Wave 1-3 ("Throw-Over") .
  • In an Expanding Diagonal, Wave 5 stops just short of reaching the Wedge Line of Wave 1-3.
  • Please see the chart for more favorable Fibonacci counts for possible Wave terminations.

 

 

Corrective Wave: 

ZigZag

proElliottWave.com ZigZag

Rules:

  • ZigZag is always a 3 wave structure.
  • Structure = 5-3-5
  • Wave B never move beyond the start of Wave A.
  • Wave B is subdivided into a three wave pattern: zigzag, flat, triangle or any combination thereof.
  • Wave A can be either an Impulsive wave or a Leading Diagonal.
  • Wave C can subdivide into 5 wave structures: a Diagonal or an Impulse wave.

Guidelines:

  • Waves A and C connected is usually parallel to the Line connecting the origin of the ZigZag to point B.
  • Waves A and C usually are Equal in length.
  • Wave A and C are more often subdivided into an Impulse Wave.
  • Wave C is always ended beyond Wave A.
  • Besides Waves A & C usually being equal, the ratios in a correction are less accurate than in an Impulse Waves 1,3 & 5.
  • See the chart for Typical Fibonacci Retracements.


Regular Flat

proElliottWave.com Regular Flat

Rules:

  • Flats are always a 3 wave structure.
  • Wave A is a three wave pattern and never a Triangle.
  • Wave B is subdivided into a three wave pattern.
  • Wave B retraces to at least 90% of Wave A.
  • Wave C always subdivide into 5 wave structures: a Diagonal or an Impulse wave.

Guidelines:

  • Waves A and C connected usually is parallel to the Line connecting the origin of the ZigZag to point B.
  • Waves A and C usually are Equal in length.
  • Wave C is always ended around the end of  Wave A.


Running Flat

proElliottWave.com Running Flat

Rules:

  • Flats are always a 3 wave structure.
  • Structure = 3-3-5
  • Wave A is a three wave pattern and never a Triangle.
  • Wave B is subdivided into a three wave pattern.
  • Wave B retraces to at least 105% of Wave A & typically up to the 138.2%.
  • Wave C does not go beyond Wave A and is "Truncated".
  • Wave C always subdivide into 5 wave structures: a Diagonal or an Impulse wave.

Guidelines:

  • Waves A and C connected usually is parallel to the Line connecting the origin of the ZigZag to point B.
  • Waves A and C usually are Equal in length.


Expanded Flat

proElliottWave.com Expanded Flat

 

 

Rules:

  • Flats are always a 3 wave structure.
  • Wave A is a three wave pattern and never a Triangle.
  • Structure = 3-3-5
  • Wave B is subdivided into a three wave pattern.
  • Wave B retraces to at least 105% of Wave A & typically up to the 138.2%.
  • Wave C always goes beyond Wave A.
  • Wave C always subdivide into 5 wave structures: a Diagonal or an Impulse wave.

Guidelines:

  • Waves C usually goes between the 100% to the 161.8% of Wave A.
  • Waves A and C usually are not Equal in length.

Barrier Triangle

proElliottWave.com Barrier Triangle

Rules:

  • In a Triangle, the waves always subdivide into 5 waves: A, B, C, D, & E.
  • Wave A never goes beyond the origin or point X.
  • Structure = 3-3-3-3-3
  • At least four of the five waves subdivide into a zigzag or a combination of zigzags.
  • Triangles do not have more than one complex subwave (only one Double or Triple).
  • One of the five waves can subdivide into an Impulse
  • In a Barrier Triangle, Wave C never goes beyond Wave A, & Wave E never moves beyond C.
  • In a Barrier Triangle, Wave D ends around Wave B, forming a straight flat line or Barrier.

Guidelines:

  • Wave B may go beyond the start of Wave A; it is not common and it is called a Running Triangle.
  • A Wave 5 following a Barrier Triangle can either be sharp, short and brief; or turn into an Extended Wave 5.
  • Barrier Triangles are less common than a Contracting Triangle.

 

Contracting Triangle

proElliottWave.com Contracting Triangle

Rules:

  • In a Triangle, the waves always subdivide into 5 waves: A, B, C, D, & E.
  • Wave A never goes beyond the origin or point X.
  • Structure = 3-3-3-3-3
  • At least four of the five waves subdivide into a zigzag or a combination of zigzags.
  • Triangles do not have more than one complex subwave (only one Double or Triple).
  • One of the five waves can subdivide into an Impulse
  • In a Contracting Triangle, Wave C never goes beyond Wave A, Wave D never moves beyond Wave B & Wave E never moves beyond C.
  • In a Contracting Triangle, Wave E ends around Wave A-C Line, but typically undershoots or overshoots the line.

Guidelines:

  • Wave B may go beyond the start of Wave A; it is not common and it is called a Running Triangle.
  • A Wave 5 following a Triangle can either be sharp, short and brief; or turn into an Extended Wave 5.
  • Contracting Triangles are the most common type of a Triangle.

 

Expanding Triangle

proElliottWave.com Expanding Triangle

Rules:

  • In a Triangle, the waves always subdivide into 5 waves: A, B, C, D, & E.
  • Wave A never goes beyond the origin or point X.
  • Structure = 3-3-3-3-3
  • At least four of the five waves subdivide into a zigzag or a combination of zigzags.
  • Triangles do not have more than one complex subwave (only one Double or Triple).
  • One of the five waves can subdivide into an Impulse
  • In a Contracting Triangle, Wave C goes beyond Wave A, Wave D moves beyond Wave B & Wave E moves beyond C.
  • In a Contracting Triangle, Wave E ends around Wave A-C Line, but typically undershoots or overshoots the line.
  • B,C & D always go beyond 100% of the proceeding subwave but never exceed 150%.

Guidelines:

  • Wave B may go beyond the start of Wave A; but doe not have to do so.
  • Expanding Triangles are the least common type of a Triangle.

 

Double

proElliottWave.com Double Rules:

  • Doubles are made of two corrective patterns joined by one corrective structure in the opposite direction labeled"X".
  • Doubles labeling: "W" for the first Pattern, followed by the "X", and then "Y" for the ending pattern.
  • Two ZigZags result into a Double ZigZag combination.
  • Double ZigZags take the place of a ZigZag in a corrective move.
  • "Double Three" can be any of the following: ZigZag and a Flat; Flat and a Flat; Flat and a ZigZag; Flat and a Triangle; or ZigZag and a Triangle

Guidelines:

  • Combinations happen more when the Corrective Flat or ZigZag is relatively too minor or small in comparison to the wave that it follows; resulting in more consolidation and sideways action.

 


Triple

proElliottWave.com Triple

Rules:

  • Triples are made of Three corrective patterns joined by two corrective structure in the opposite direction labeled"X"s.
  • Triples labeling: "W" for the first Pattern; followed by the "X"; then "Y" for the ending pattern; followed by another "X", and the followed by"Z".
  • Three ZigZags result into a Triple ZigZag combination.
  • Triple ZigZags take the place of a ZigZag in a corrective move.
  • "Triple Three" flat combination is rare and it is formed by combination of three lats.

Guidelines:

  • Combinations happen more when the Corrective Flat or ZigZag is relatively too minor or small in comparison to the wave that it follows; resulting in more consolidation and sideways action.

 

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