Search and explore every term in Elliott Wave Theory. Click any entry to expand.
A five-wave structure that moves in the direction of the primary trend. Labelled 1-2-3-4-5. Waves 1, 3, and 5 are motive; waves 2 and 4 are corrective. The impulse is the building block of all trending markets. Rules: Wave 2 never retraces 100% of Wave 1; Wave 3 is never the shortest; Wave 4 never overlaps Wave 1.
The first wave of an impulse. Often hard to identify in real time as it looks like a counter-trend rally. Volume is modest, news still negative. Smart money accumulates. Sets the length baseline for Waves 3 and 5.
Corrective wave against Wave 1. Retraces 50–76.4% of Wave 1 but never 100% or more (inviolable rule). Creates the "shakeout" that removes weak hands before the powerful Wave 3. Typical retracements: 61.8% (most common), 50%, 76.4%.
The most powerful and typically the longest impulse wave. Never the shortest impulse wave (inviolable rule). Breakouts occur, volume surges, fundamentals confirm, public enters. Most commonly extends to 161.8% of Wave 1. The best wave to be positioned for.
Corrective wave against Wave 3. Typically sideways and complex (flat or triangle). Cannot overlap Wave 1's price territory (inviolable rule). Guideline of Alternation: tends to contrast in character with Wave 2. Common retracement: 38.2% of Wave 3.
The final impulse wave in the direction of trend. Market breadth narrows. RSI and MACD often diverge (price makes new high, momentum does not). The public is extremely bullish. Often sets up the best short trade of the cycle as corrective A-B-C follows.
First wave of the corrective ABC sequence. Looks like a routine pullback in the uptrend. Volume begins to increase to the downside. Wave A's internal structure (5 waves = zigzag; 3 waves = flat/triangle) identifies the corrective pattern type.
Counter-rally against Wave A. The classic "bull trap" — the crowd believes the uptrend has resumed. Volume is lower and the move lacks conviction. Rarely retraces more than 100% of Wave A. Most common retracement: 61.8% of Wave A.
The decisive, devastating corrective decline. Almost always a 5-wave structure internally. Panic selling emerges, news turns negative, fundamentals deteriorate. Typically equals Wave A in length or extends to 161.8% of Wave A.
Inviolable. Wave 2 must end above the origin of Wave 1 (in a bull market). If price retraces 100% or more of Wave 1, the wave count is invalid and must be re-evaluated. No exceptions.
Inviolable. Wave 3 must be longer than at least one of Wave 1 or Wave 5. Wave 3 cannot be the shortest of the three impulse waves. If it is, the count is wrong.
Inviolable. In an impulse wave, Wave 4 cannot enter the price territory of Wave 1. Exception: diagonal triangles. If overlap occurs in a standard impulse, the count is invalid.
A guideline (not a rule): corrective waves tend to alternate in character. If Wave 2 is a sharp, deep correction (zigzag), Wave 4 will tend to be a shallow, sideways correction (flat or triangle), and vice versa. Helps anticipate corrective structure.
The sharpest and most common corrective pattern. Internal structure: Wave A subdivides into 5, Wave B into 3, Wave C into 5. Wave C typically equals or exceeds Wave A. Most common in Wave 2 positions. Creates steep, clean retracements.
A sideways correction. All three waves (A, B, C) are roughly equal in size. Wave B retraces nearly 100% of Wave A. Three variants: Regular Flat (C ends near A's origin), Expanded Flat (C exceeds A's origin), Running Flat (C ends above A's origin). Common in Wave 4.
Five overlapping corrective waves (A-B-C-D-E) within converging trendlines. Almost always appears in Wave 4 or Wave B positions — never in Wave 2. The "thrust" out of the triangle equals the widest part. Four types: contracting, expanding, ascending, descending.
Complex corrections joining two or three simple zigzag patterns via connector waves labelled X. Appear in strong trend markets where a single zigzag doesn't retrace enough. Signal a powerful underlying trend when complete. More common in large Wave 4 and Wave 2 corrections.
A 5-wave structure where each subwave is a corrective (3-wave) structure. Appears only in Wave 1 or Wave 5 (leading diagonal) or Wave C (ending diagonal). Wave 4 CAN overlap Wave 1 — the only exception to Rule III. Signals exhaustion or a powerful new trend beginning.
The three-wave counter-trend movement following a five-wave impulse. The basic corrective structure: Wave A down, Wave B up (partial retracement), Wave C down to completion. The ABC correction itself subdivides into smaller 5-3 patterns at lower degrees.
The most important Fibonacci ratio in Elliott Wave analysis. 0.618 is the key retracement for Wave 2. 1.618 is the key extension for Wave 3. Derived from the Fibonacci sequence where each number is the sum of the two preceding numbers: 1, 1, 2, 3, 5, 8, 13, 21…
Corrective waves retrace prior impulse waves at predictable Fibonacci levels. Key levels: 23.6%, 38.2%, 50%, 61.8%, 76.4%. Wave 2 most commonly retraces 61.8% of Wave 1. Wave 4 most commonly retraces 38.2% of Wave 3.
Impulse waves extend to Fibonacci multiples of prior waves. Key levels: 138.2%, 161.8%, 261.8%, 423.6%. Wave 3 most commonly extends to 161.8% of Wave 1. Wave 5 often equals Wave 1 (100%) or extends to 161.8% of Wave 1.
Key Fibonacci level derived from 1 − 0.618. Most common retracement for Wave 4 against Wave 3. Also the minimum retracement expected in most corrective structures. In strong trends, Wave 4 may only retrace 23.6% of Wave 3.
A guideline stating that when Wave 3 is extended, Waves 1 and 5 tend to be equal in length (or relate by 0.618). Also applies to corrective waves: Wave C often equals Wave A in length. Useful for projecting price targets.
Elliott Wave patterns repeat at every timeframe simultaneously. A Wave 3 on a monthly chart contains a complete 5-wave impulse on the weekly, which contains 5-wave impulses on the daily, and so on. Every wave at every degree is simultaneously a subwave of a larger wave and contains smaller subwaves.
The size or timeframe classification of a wave. From largest to smallest: Grand Supercycle (centuries), Supercycle (decades), Cycle (years), Primary (months–years), Intermediate (weeks–months), Minor (weeks), Minute (days), Minuette (hours). All degrees operate simultaneously.
Any wave that moves in the direction of the primary trend. Motive waves subdivide into 5 subwaves. In an uptrend: Waves 1, 3, 5, and sub-waves within these are motive. Motive waves are more straightforward to trade as they offer clear directional momentum.
Any wave that moves against the direction of the primary trend. Corrective waves subdivide into 3 subwaves (or multiples of 3). In an uptrend: Waves 2 and 4 are corrective, as is the entire A-B-C sequence following the impulse. More complex and harder to trade than motive waves.
A false signal where price appears to resume an uptrend, causing traders to go long — only to reverse sharply. In Elliott Wave, the classic bull trap is Wave B of a corrective ABC: a counter-rally that looks bullish but is followed by the devastating Wave C decline.
A key confirmation signal for wave endings. In Wave 5: price makes a new high but RSI/MACD fail to confirm (bearish divergence) — signals impulse exhaustion. In Wave C: price makes a new low but RSI/MACD diverge (bullish divergence) — signals corrective exhaustion and potential trend reversal.
The price level at which a wave count is proven wrong. For a bullish count: the origin of Wave 1. For a Wave 2 long: if price breaks below Wave 1's starting point, the count is invalid. Always define the invalidation level before entering a trade — it is your stop loss anchor.
When one impulse wave (usually Wave 3, sometimes Wave 1 or Wave 5) extends far beyond the typical 161.8% Fibonacci projection. An extended Wave 3 subdivides into 9 visible subwaves at the same degree. Extension in Wave 1 or Wave 5 leads to post-extension retracements to unusual depths.
When Wave 5 fails to exceed the end of Wave 3 in price. Also called a "failure." Rare, but signals extreme weakness in the underlying trend. The subsequent corrective decline is often severe. Most common in highly volatile markets (crypto, leveraged instruments).
A technique for projecting wave targets using parallel trendlines. Draw a baseline through Wave 1 and Wave 3 ends; a parallel through Wave 2 end projects Wave 4 target. Then draw a baseline through Wave 2 and Wave 4; a parallel through Wave 3 end projects Wave 5 target.
When Wave 5 briefly exceeds the upper channel line before reversing. Common in ending diagonal patterns. The "throw-over" is accompanied by high volume and euphoric sentiment, then a sharp reversal confirms the wave is complete and the corrective ABC begins.
A wave degree spanning multiple decades. The S&P 500's bull market from 1932 is considered a Grand Supercycle. Understanding higher-degree waves provides context for lower-degree counts — a Wave 2 correction within a Supercycle uptrend can be extremely deep and long-lasting.
The analyst's interpretation of where price currently sits within the Elliott Wave structure. Always maintain a primary count (most probable) and an alternate count (if the primary is invalidated). A good analyst always knows the exact price level that proves their count wrong.
No terms match your search.