Now you see that impulses develop other bigger impulses, brick by brick. Below you can see the 30-minute chart, so we can examine this structure in greater detail and find an impulse i-ii-iii-iv-v inside the wave (iii). There’s an impulse in wave (iii) of ((iii)) of 3 in the chart above (the price movement in orange). ![]() Moreover, we could observe another impulse in wave ((iii)), which counted like (i)-(ii)-(iii)-(iv)-(v). Inside wave 3 we could count another impulse like ((i))-((ii))-((iii))-((iv))-((v)). There's a huge upward impulse, which labelled as 1-2-3-4-5. So, let’s play this 'Wave Matryoshka' game. This occurs especially when wave 3 forms a huge extension with a massive rally at the end.Īs you can see from the chart below, usually there are a few impulses form different wave degrees on the same chart. It simply means that wave 5 can't reach the ending point of wave 3. If a wave is extended, it means that it is much longer than the others, so we can observe the inner structure of an extended wave, but we usually can't do so for not extended waves. Sometimes, one or even two (which is quite rare) motive waves (1, 3 or 5) could form an extension. So, that's why 'it's all about the context'. If we have an impulse as the fifth wave, then it could be a moment for a bigger correction in some form and fashion. In this case, it's logical to expect just a correction, which could be the second wave. Let's imagine that we have an impulse, which is supposed to be the first wave of a bigger impulse. in the whole wave count.Īs we know, the Elliott wave principle works like a Russian nesting doll (matryoshka), so each impulse is built of smaller impulses. It's essential to find out the place of an impulse in a bigger picture, i.e. When the fifth wave ends, it's time for a correction or even for a new trend in a different direction. It's important to understand that this exception is pretty rare, so we shouldn't label it on a daily basis on every other wave count. So, from time to time you can see a really short-term overlap between waves 4 and 1. However, there's an exception from this rule for margin markets like forex. ![]() As you can see, the two examples above fully fit the rules, so these price movements were labelled as impulses.Īs know from the rules, wave 4 can't touch the ending point of wave 1. It's just the main rules, but there are also some guidelines as well, which we're going to examine later. Wave 2 can't be a triangle or a triple three structure.Wave 5 could be an impulse or an ending diagonal pattern.Wave 1 could be an impulse or a leading diagonal pattern.Wave 4 never ends beyond the ending point of wave 1.Wave 3 always breaks the high of wave 1. ![]()
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