Elliott Wave

Elliott Wave Theory holds that market movements unfold in repetitive, fractal patterns of five-wave impulses in the direction of the primary trend and three-wave corrections against it. A complete cycle consists of waves 1–2–3–4–5 (impulse) followed by waves A–B–C (correction). Wave counts apply across all timeframes: each wave of a higher-degree cycle contains a complete lower-degree cycle of the same shape.

Rules and guidelines constrain counts: wave 2 cannot retrace more than 100% of wave 1, wave 3 cannot be the shortest impulse wave, wave 4 cannot overlap wave 1's price territory in most cases. Fibonacci relationships recur. Wave 3 is often 1.618× wave 1, wave 5 often equals wave 1, wave 2 often retraces 50–61.8%. Critics note that counts are subjective and often visible only in retrospect; proponents argue that strict rule-following produces high-probability setups at wave-3 launches and wave-C completions. Most strategies combining Elliott Wave with other confirmation (volume, structure) outperform pure wave-counting.