Complete cycle

Elliott Wave Theory Rules

The basic concept of Elliott Wave Analysis is that the chart consists of motive waves and corrective waves.

Motive waves have a five-waves structure, while corrective waves have a three-waves structure (or a variation thereof).

Not only the five-wave model is a moving wave, but also each unidirectional component of this model, i.e. waves 1, 3, and 5. Such a structure is called “motive” because it pushes the market with considerable force.

A corrective wave applies to all counter-trend interruptions, where it takes the place of waves 2 and 4 in a five-wave model. Their structure is called “corrective” because each of them appears as a response to the previous driving wave, but performs only a partial recovery, or “correction” of the progress made.

Thus, these two types of waves are fundamentally different, both in their role and in their structure.

One complete cycle, which includes eight waves, consists of two distinct stages: a five-wave driving stage (also called “five”), the internal waves of which are denoted by numbers, and a three-wave corrective stage (also called “three”), the internal waves of which are denoted by letters. Just as wave [2] corrects wave [1], the sequence (A)-(B)-(C) corrects the sequence (1)-(2)-(3)-(4)-(5)

Keep in mind that the model schemes are created on the basis of Pulses and Zigzags, as a reflection of the appearance of the driving and correcting waves.

For example, the zigzag pattern is displayed by the structure: Impulse + Zigzag + Impulse. This should be perceived as a moving + corrective + moving. Because on a real chart, for example, you may encounter a diagonal+plane+impulse pattern. And such a combination of models will be classified as a higher degree model – the Zigzag. To accurately read the internal structure of each model, it is necessary to regularly refer to the rules and regulations.

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