ELLIOTT WAVE BASICS (Contd)
Basic Sequence
There are two types of waves: impulse and corrective.
Impulse waves move in the direction of the larger degree wave. When the larger
degree wave is up, advancing waves are impulsive and declining waves are corrective.
When the larger degree wave is down, impulse waves are down and corrective
waves are up. Impulse waves, also called motive waves, move with the bigger
trend or larger degree wave.
Corrective waves move against the larger degree
wave.
The chart above shows a rising 5-wave sequence. The
entire wave is up as it moves from the lower left to the upper right of the
chart. Waves 1,3 and 5 are impulse waves because they move with the trend.
Waves 2 and 4 are corrective waves because they move against this bigger trend.
A basic impulse advance forms a 5-wave sequence.
A basic corrective wave forms with three waves,
typically a, b and c. The chart below shows an abc corrective sequence. Notice
that waves a and c are impulse waves (green). This is because they are in the
direction of the larger degree wave. This entire move is clearly down, which
represents the larger degree wave. Waves a and c move with the larger degree
wave and are therefore impulse waves. Wave b, on the other hand, moves against
the larger degree wave and is a corrective wave (red).
Combining a basic 5 wave impulse sequence with a basic 3
wave corrective sequence yields a complete Elliott Wave sequence, which is a
total of 8 waves. According to Elliott, this complete sequence is divided into
two distinct phases: the impulse phase and the corrective phase. The abc
corrective phase represents a correction of the larger impulse phase.
These 8-wave charts show two larger degree waves (I and
II) as well as the lesser degree waves within these larger degree waves. Waves
1-2-3-4-5 are one lesser degree than Wave I. By extension, Wave I is one larger
degree than Waves 1-2-3-4-5. Waves a-b-c are one lesser degree than Wave II.
(to be contd)
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