Impulse Waves (1-5)
Overview
The impulse wave pattern consists of five waves in the direction of the larger trend: three motive waves (1, 3, 5) separated by two corrective waves (2, 4). This is the core structure of Elliott Wave Theory. Wave 3 is typically the longest and most powerful, never the shortest. Wave rules: Wave 2 cannot retrace beyond the start of Wave 1. Wave 4 cannot overlap with Wave 1 territory (except in diagonals).
Key Concepts
Five-wave structure: 1-2-3-4-5, Three rules: Wave 2 cannot exceed Wave 1 start. Wave 3 is never the shortest impulse wave. Wave 4 cannot overlap Wave 1 (except diagonals). Guidelines: Wave 3 is often 1.618× Wave 1. Wave 5 = Wave 1 in length (common). Alternantion: if Wave 2 is sharp, Wave 4 is flat (and vice versa).
Entry Signals
Enter at the start of Wave 3 (after Wave 2 completion near 0.618 Fibonacci), Enter at the start of Wave 5 (after Wave 4 completion), Buy the Wave 2 pullback: wait for 0.5-0.618 retracement of Wave 1, Enter Wave 3 extension: breakout above Wave 1 high with momentum
Exit Signals
Wave 3 target: 1.618× Wave 1 projected from Wave 2 low. Wave 5 target: equal to Wave 1, or 0.618× length of Waves 1-3 measured from Wave 4 low. Invalidation: if Wave 2 exceeds Wave 1 start, recount.
Best Timeframes
Wave counting: Daily/Weekly. Entries: 4H. Confirmation: 1H.
Pro Tips
Elliott Wave counting is subjective — different analysts can have different counts. Use Fibonacci ratios and strict rules (2 cannot retrace beyond 1 start, 3 never shortest, 4 cannot overlap 1) to validate your count. If it breaks a rule, the count is wrong.
More Topics in This Category
Wave Personality & Psychology
Each Elliott Wave position carries a distinct psychological character that reflects the emotions and behaviour of market participants during that phase. Wave one is disbelief, wave three is recognition and momentum, wave five is euphoria, wave A is denial, wave B is false hope, and wave C is capitulation. Understanding these personality traits helps traders identify which wave is currently unfolding.
Fibonacci Retracements & Extensions
Fibonacci ratios are central to Elliott Wave — they define where waves are likely to end and project targets for the next wave. Key retracement levels (0.382, 0.5, 0.618, 0.786) identify where pullback waves (2, 4, B) are likely to end. Extension levels (1.272, 1.618, 2.618) project where motive waves (3, 5, C) are likely to reach.
Corrective Waves (A-B-C)
After a five-wave impulse, the market enters a three-wave correction labeled A-B-C. Corrective waves move against the larger trend and take many forms: zigzags (sharp A-B-C), flats (sideways A-B-C), and triangles (contracting A-B-C-D-E). Corrections are always three-wave structures (or combinations of threes). Identifying correction completion signals the next impulse wave entry.
Wave Degrees & Fractals
Elliott Waves are fractal — the same five-wave impulse and three-wave corrective patterns appear at every scale, from monthly charts down to tick charts. Wave degrees label these nested patterns: Grand Supercycle, Supercycle, Cycle, Primary, Intermediate, Minor, Minute, Minuette, Sub-Minuette. Understanding multi-degree analysis allows traders to see how smaller waves fit into larger structures.