The Elliott Wave Principle has three of them

 

RULES are great. They tell you what you can’t do. The Elliott Wave Principle has three of them.

 

In a five-wave impulse (shown in the chart below):

• Wave 2 can never retrace more than 100% of wave 1
• Wave 3 can never be the shortest among waves 1, 3 & 5
• Wave 4 can never end in the price territory of wave 1

GUIDELINES tell you what’s PROBABLE.       For instance, the guideline of alternation states that if wave two is a sharp retracement, expect wave four to be a sideways correction, and vice versa. The chart below illustrates.

Want to learn more about the Elliott Wave Principle and how we apply it? Check out our Trader’s Classroom educational service.

 

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