What are the 3 main Elliot wave rules

1. Wave 2 never retraces 100% of wave 1

2. Wave 3 cannot be the shortest wave in a completed 5 wave sequence.

3. Wave 4 cannot retrace into wave 1

Guidelines for trading  Elliot wave

  • The impulse wave is composed of 5 waves.
  • Wave 3 is usually the strongest wave
  • Wave 5 and wave 1 are very often equal in price
  • Wave 2 usually unfolds as simple a-b-c correction
  • Once a 5-wave sequence is complete the whole sequence is corrected.
  • The first leg off the move from a completed 5 wave sequence often finds support and resistance at the prior minor wave 4.
  • Once a correction is completed the main trend resumes
  • Wave 4 can’t retrace into the area of Wave 1.

The violation of any of the above rules implies that the Elliot wave count is incorrect.

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