Forex glossary
Elliott Wave
Elliott Wave theory interprets price moves as nested motive and corrective wave structures. A standard impulse has five waves: wave 2 cannot pass the start of 1, wave 3 cannot be the shortest of 1, 3 and 5, and 4 does not overlap 1. Diagonals and corrections follow different structures.
Illustrative example
How does it work in practice?
Assume wave 1 rises from 100 to 110 and wave 2 retraces to 104. That fragment satisfies one impulse rule; a fall below 100 would invalidate this particular hypothetical wave count.
A case to work through
Third does not mean longest
Hypothetical standard-impulse wave lengths are one=10, three=8 and five=6.
- Wave three is shorter than one but longer than five.
- It is not the shortest, so this particular impulse condition is satisfied.
What follows? Check the remaining rules before accepting the count.
Example boundary: One satisfied rule does not establish the full wave count.
A useful distinction
Elliott Wave / Harmonic Pattern
Elliott organizes wave hierarchy and impulse rules; harmonic patterns check selected ratios between swings.
Check your understanding
Apply a standard impulse rule without making it stricter.
Show the answer and explanation
No; wave three is shortest
9 is below both 12 and 10.
Anchors, ratios and rules
Step 10 / 10 · 0 / 10 reviewed
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Read the fuller explanation
Related terms
Sources and documentation
- StockCharts – Elliott Wave guidelines
Standard impulse constraints, including wave three not being shortest, and diagonal distinctions.
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