THE ELLIOTT WAVE PRINCIPLE
ELLIOTT'S MARKET PATTERNS
The 5-Wave Swing
If the market rhythm is regular, wave 2 will not retrace to the beginning of
wave 1, and wave 4 will not correct lower than the top of wave 1. If it does,
the wave count must be adjusted (Figure 2-2).
Figure 2-2 (a) Erroneous counting in a 5-wave up-swing; (b) correct counting in
a 3-wave up-swing; (c) erroneous counting in a 5-wave up-swing; (d) correct
counting in a 5-wave up-swing.
Corrections
Each of the corrective waves 2 and 4, can be subdivided into three waves of a
smaller degree. The correction wave 2 and corrective wave 4 alternate in
pattern. Elliott called this the rule of alternation. This means that, if
wave 2 is simple, wave 4 will be complex, and vice versa. This is shown in
Figure 2—3.
Figure 2-3 (a) Wave 2 is simple; wave 4 is complex; (b) wave 2 is complex; wave
4 is simple. Forex 101.
Forex Art Of Fibonacci (Forex 101)
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Forex Art Of Fibonacci (Forex 102)
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