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.
How long you should hold an open position, is a personal thing for all traders. The decision is all yours. You know what your goals are as a trader, the kind of strategy you use to trade. All this starts from what you are? and What you want? If I am to answer, this...