Every wave always has its own set of 5 subwaves. When you finish a full set of 5 big waves, it now becomes ONE large wave.
Rules:
1) For EVERY motive wave, there is a CORRECTIVE wave.
2) Wave 3 is NEVER the shortest
If you count waves going up, and see that wave 3 is shortest out of all 5 waves, you're count is wrong.
3) A Corrective wave does NOT retrace back to the beginning of its start!
If this happens, you counted wrong. If you count ONE big wave, and it retraces below that point, then it is NOT a true Elliot motive wave . That is when there's typically something fundamentally wrong. If you're looking for the next big coin, look for one that has had an impulse wave up, and has NEVER retraced back below that starting point. That is an indication of potential for healthy growth.
4) Corrective wave 4 CANNOT drop into the territory of wave 1
There are exceptions to this in ascending and descending triangles. It actually typically happens in corrective waves, but should not happen in impulse wave. This is how I find critical support levels. If it hits the support (peak of wave 1), then it should not go any lower, it should at least get immediate rejection to that area. Like I said, it can drop a little bit past sometimes (especially in triangular patterns), but 8 times out of 10, if it goes too far, your count is wrong. And that wave 4 is more than likely a wave 2 of a subdivided 5 wave structure in an extended 3rd wave (look at the wave all the way to the right to see what I'm talking about).
5) Correction waves NEVER happen in 5 waves. It is always At least an ABC or ABCDE. Never a 12345. know that correction waves have their own personality. They are harder to predict and have MANY different forms. A, C and E waves go with the downtrend, B and D waves go against it. A and C waves CAN have 5 waves within them, but don't confuse it with it an ABCDE.
I think this is it for the basics. Elliot wave is my baby. And I'm still learning, because there is so much to know about it. But when you get it down, and have the eye for it, making money starts to get easy. This is how some analysts have predicted big "bubbles" and crashes because they counted Elliot Waves. And using Fib along with this, makes the whole process easier. It's kind of scary honestly because you can predict future events in terms of price level.
Pricing in the market is a full reflection of market sentiment.
This is a psychological tool used to detect market psychology. This is why i do VERY LITTLE fundamental analysis , because I see everything in the charts. The charts tell me everything. Elliot wave is not only a law of the markets, but is kind of a law of nature (at least Fibonacci is). Even scientists use it for things that I don't know.
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