Elliott’s pattern consists of “impulsive waves” and “corrective waves.” An
impulsive wave is composed of five subwaves. It moves in the same direction as
the trend of the next larger size; a corrective wave is divided into three subwaves.
It moves against the trend of the next larger size.
Each wave is further divided into that very same pattern, like so:
that the movement at the next larger degree of trend is also upward. It also warns
us to expect a three-wave correction — in this case, a downtrend.
That correction, wave (2), is followed by waves (3), (4) and (5) to complete an
impulsive sequence of the next larger degree, labeled as wave 1. At that point,
again, a three-wave correction of the same degree occurs, labeled as wave 2.
Note that regardless of the size of the wave, each wave one peak leads to the
same result a wave two correction.
Within a corrective wave, subwaves A and C are usually smaller-degree impulsive
waves. This means they too move in the same direction as the next larger trend.
(In Figure 2 below, waves A and C are in the same direction as the larger wave (2).)
Note that because they are impulsive, they themselves are made up of five
subwaves. Waves labeled with a B, however, are corrective waves; they move in
opposition to the trend of the next larger degree (in this case, they move upward
against the downtrend). These corrective waves are themselves made up of three
subwaves.
impulsive wave is composed of five subwaves. It moves in the same direction as
the trend of the next larger size; a corrective wave is divided into three subwaves.
It moves against the trend of the next larger size.
In the above illustration, waves 1, 2, 3, 4 and 5 together complete a larger
impulsive sequence, labeled wave (1). The impulsive structure of wave (1) tells usthat the movement at the next larger degree of trend is also upward. It also warns
us to expect a three-wave correction — in this case, a downtrend.
That correction, wave (2), is followed by waves (3), (4) and (5) to complete an
impulsive sequence of the next larger degree, labeled as wave 1. At that point,
again, a three-wave correction of the same degree occurs, labeled as wave 2.
Note that regardless of the size of the wave, each wave one peak leads to the
same result a wave two correction.
Within a corrective wave, subwaves A and C are usually smaller-degree impulsive
waves. This means they too move in the same direction as the next larger trend.
(In Figure 2 below, waves A and C are in the same direction as the larger wave (2).)
Note that because they are impulsive, they themselves are made up of five
subwaves. Waves labeled with a B, however, are corrective waves; they move in
opposition to the trend of the next larger degree (in this case, they move upward
against the downtrend). These corrective waves are themselves made up of three
subwaves.
See the second lesson