- Elliott Waves are fractals. Each wave can be split into parts, each of which is a very similar copy of the whole. Mathematicians like to call this property "self-similarity".
- A trending market moves in a 5-3 wave pattern.
- The first 5-wave pattern is called impulse wave.
- One of the three impulse waves (1, 3, or 5) will always be extended. Wave 3 is usually the extended one.
- The second 3-wave pattern is called corrective wave. Letters are used instead of numbers to track the correction.
- Waves 1, 3 and 5, are made up of a smaller 5-wave impulse pattern while Waves 2 and 4 are made up of smaller 3-wave corrective pattern.
- There are 21 types of corrective patterns but they are just made up of three very simple, easy-to-understand formations.
- The three fundamental corrective wave patterns are zig-zags, flats, and triangles.
- Rule Number 1: Wave 3 can NEVER be the shortest impulse wave
- Rule Number 2: Wave 2 can NEVER go beyond the start of Wave 1
- Rule Number 3: Wave 4 can NEVER cross in the same price area as Wave
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