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What are the core Elliott Wave rules?

1. Wave 2 never retraces more than 100% of wave 1.
2. Wave 3 cannot be the shortest of the three impulse waves, namely waves 1, 3 and 5.
3. Wave 4 does not overlap with the price territory of wave 1, except in the rare case of a diagonal triangle formation.

Those 3 rules are what is at the core of Elliott Wave analysis. The list is probably much shorter and simpler than you might have thought. This is a part of the elegance of the approach.

However, layered on top of those rules is a collection of specific patterns that occur in prices. Each of the patterns has an associated set of rules and guidelines that define the formation of the pattern. You can learn the essential rules and guidelines for each of those patterns, and keep a convenient reference to them on WaveBasis by using the Interactive Wave Guide.

 

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