Predict Market Direction.
Identify turning points.
Provide Guidance for Entering and Exiting Positions.
In the pictures below the description of the complete market cycle.
MOTIVE WAVES
Key Characteristics
. Five-wave structures, numbered 1-5
. In the direction of the main trend of one larger degree
. Wave 2 cannot retrace more than 100% of wave 1
. Wave 3 can never be the shortest and is often the
longest
EXTENSIONS
Key Characteristics
. Elongated impulse wave
. Appears in either wave 1, 3 or 5
. Often seen in wave 3 for the stock market
. Often seen in wave 5 in commodities
MOTIVE WAVES
Five-Wave Structures
. Impulse
1. Extensions
2. Truncations
. Diagonal Triangles
IMPULSE WAVES
Key Characteristics
. Wave 4 never enters the price territory of wave 1.
. Actionary waves 1, 3 and 5 are motive waves.
. Wave 3 is always an impulse wave.
TRUNCATIONS
Key Characteristics
. Wave 5 does not exceed the end of wave 3
. Contains necessary five subwaves
. Often occurs after a strong third wave
DIAGONAL TRIANGLES
Key Characteristics
. Wave 4 almost always moves into the price
territory of wave 1
. Waves 1, 3 and 5 are composed of three
subwaves, not five
. Found at termination points of larger pattern,
indicating exhaustion of larger pattern
. Normally has wedge shape within two
converging lines
Elliott Analisys is:
The Wave Principle = Graphic of Mass Psychology
Motive Waves = 5 Wave Structures, Main Trend of One Larger Degree
Types of Motive Waves = Impulse, Diagonal Triangle
Impulse:Waves 1, 3, 5 = 5 Impulse Subwaves
(Extensions, Truncations)
Wave 4 ≠ Price Territory of Wave 1
Diagonal Triangle: Waves 1, 3, 5 = 3 Subwaves
Wave 4 = Price Territory of Wave 1
Signal = Imminent Major Trend Reversal
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