🟢Impulse | Elliott Waves | Beginners Guide | Full Course | Elliott Waves Made Simple
Understanding Impulsive Structures in Trading
Overview of Impulsive Waves
- The most common impulsive structure consists of a five-wave move upwards, where wave three is the longest and strongest. After wave five, a three-wave corrective structure typically follows.
- Within waves one, three, and five, lower degree impulsive structures can be identified. Waves two and four should exhibit three-wave corrective patterns.
Key Rules for Impulse Waves
- Important rules include:
- Wave one and four must not overlap.
- Wave three cannot be the shortest among waves one, three, and five.
- Common target areas for wave two are between the 0.5 to 0.786 Fibonacci retracement levels from the low to high of wave one.
Target Calculations for Waves
- For calculating targets of wave five:
- Use Fibonacci extensions (1.236 to 1.618) from high of wave three to low of wave four.
- Trend-based extensions can also provide target areas.
- It’s crucial that wave five finishes above the high of wave three; truncated waves are rare unless other conditions fail.
Time Analysis in Wave Structures
- Comparing time between waves is essential; ideally, wave two should finish after the 0.382 Fibonacci time level but before the four-time level.
- Wave four often exhibits alternation with respect to time compared to wave two—if one is short in duration, the other tends to be longer.
Volume Characteristics in Impulsive Moves
- In an upward impulse:
- Volume increases during waves one and three but decreases during corrective phases like wave two and four.
- Notably, volume in wave five should be lower than that in wave three despite price making higher highs.