🌀 Elliott Wave Theory Recap
Let’s review the key points we’ve learned about Elliott Wave Theory:
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Elliott Waves are fractals — meaning each wave can be broken down into smaller waves that resemble the overall pattern. This “self-similarity” is a key feature of fractals.
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Market trends follow a 5-3 wave structure:
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The first 5-wave sequence is called the impulse wave.
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The next 3-wave sequence is the corrective wave, labeled as A-B-C instead of numbers.
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In every impulse wave (1, 3, and 5), one wave will be extended — typically Wave 3.
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Inside the larger wave structure:
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Waves 1, 3, and 5 are each made up of five smaller impulse waves.
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Waves 2 and 4 consist of three smaller corrective waves.
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While there are 21 corrective pattern variations, they’re all built from three basic formations:
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Zigzags
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Flats
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Triangles
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📏 The 3 Cardinal Rules of Elliott Wave Labeling
When identifying and labeling Elliott Waves, these three rules must never be broken:
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Wave 3 can NEVER be the shortest impulse wave.
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Wave 2 can NEVER retrace beyond the beginning of Wave 1.
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Wave 4 can NEVER overlap the price territory of Wave 1.
🎯 Final Thoughts
If you study price charts closely, you’ll start to notice that markets really do move in wave-like patterns.
That said, real-world charts rarely look as neat as textbook examples. So, learning to apply Elliott Wave Theory takes time, patience, and lots of practice.
💡 Stay focused. Keep analyzing. The more screen time you get, the sharper your wave-counting skills will become.
Don’t give up — you're on the right track!