Why this matters: If you can identify where are in the wave count, you know whether to ride the trend (during impulse waves) or wait for the correction to complete (during ABC waves).
Best: End of Wave 2 (trend confirmed, low risk) or end of Wave 4 (reload for Wave 5)
Aggressive: End of Wave C (correction complete, new impulse starting)
Where to exit:
End of Wave 5 (impulse exhaustion) or during Wave B (sucker rally—sell into strength)
Where to avoid:
Late Wave 3 (already extended), Wave 5 (top near), Wave A (direction unclear)
Stop-loss placement:
Below Wave 1 start (if in Wave 3)
Below Wave 4 low (if in Wave 5)
Below Wave C end (if entering new impulse)
Recall Feynman Explanation (Explain to a 12-Year-Old)
Imagine a crowd of kids running up a hill to get ice cream at the top. They don't run straight up—here's how they move:
Going UP (5 steps):
First, a few brave kids start running up (Wave 1).
Some get tired and walk back down a bit, but they don't go all the way to the bottom (Wave 2).
Everyone sees the leaders and gets excited—BIG rush up the hill! (Wave 3, the strongest)
A few kids stop to rest, but they don't go back past where the first group started (Wave 4).
Final push—everyone reaches the ice cream truck at the top! (Wave 5)
Coming DOWN (3 steps):
After getting ice cream, they head back:
A. Some kids run down fast (Wave A).
B. Wait! A few think they forgot something and run back UP a bit (Wave B, the trap).
C. Nope, nothing there—everyone walks all the way down (Wave C).
Notice: Going UP takes 5 steps (with 2 breaks), but coming DOWN takes only 3 steps. Markets do the same thing!
Elliott Wave Degrees: How 5-3 patterns nest across timeframes
Fibonacci Retracements: Wave 2 and 4 often retrace 38%, 50%, or 62% (Fibonacci levels)
Wave 3 Extension Rules: Why Wave 3 is typically 1.618× Wave 1
Corrective Wave Types: Zigzag, Flat, Triangle—all are 3-wave structures or combinations
Impulse Wave Rules: Detailed rules for valid impulse waves
Market Psychology and Volume: Why waves reflect crowd behavior
RSI Divergence: Often appears at Wave 5 tops and Wave C bottoms
#flashcards/stock-market
How many waves are in an Elliott Wave impulse phase? :: 5 waves (labeled 1, 2, 3, 4, 5). Waves 1, 3, 5 are motive (with the trend); waves 2, 4 are corrective (against the trend).
How many waves are in an Elliott Wave corrective phase?
3 waves (labeled A, B, C). Wave A is the initial correction, Wave B is the false hope rally, Wave C is the final capitulation.
What is the rule about Wave 2 and Wave 1?
Wave 2 never retraces more than 100% of Wave 1. It cannot go below the start of Wave 1 (in an uptrend).
What is the rule about Wave 3 length?
Wave 3 is NEVER the shortest wave among waves 1, 3, and 5. It is usually the longest and strongest.
What is the rule about Wave 4 and Wave 1?
Wave 4 never enters the price territory of Wave 1. In an uptrend, Wave 4 cannot drop below the high of Wave 1 (no overlap).
In a correction, which wave is the "sucker rally"?
Wave B. It retraces 50-78.6% of Wave A, making traders think the trend is resuming, but it's followed by Wave C down.
What does "fractal" mean in Elliott Wave?
Each wave subdivides into smaller waves following the same 5-3 pattern. Impulse waves subdivide into 5 waves; corrective waves subdivide into 3 waves.
Where is the best low-risk entry in an impulse?
End of Wave 2 (trend confirmed, early entry) or end of Wave 4 (reload for Wave 5 with tight stop below Wave 4 low).
What is a common mistake when counting waves?
Counting swings instead of structure. A 3-wave move that looks like 5 swings is still a correction if the waves don't subdivide correctly (impulse waves must subdivide into 5).
What typically happens to volume in Wave 3 vs Wave 5?
Wave 3 has the highest volume (strong participation). Wave 5 often shows declining volume (divergence), signaling exhaustion.
What Fibonacci levels do Wave 2 and Wave 4 commonly retrace?
Wave 2 often retraces 50-62% of Wave 1. Wave 4 often retraces 38-50% of Wave 3.
What is the typical length relationship between Wave C and Wave A?
Wave C often equals Wave A in length (1:1 ratio) or extends to 1.618× Wave A (Fibonacci extension).
What are the nine Elliott Wave degrees from largest to smallest?
Grand Supercycle → Supercycle → Cycle → Primary → Intermediate → Minor → Minute → Minuette → Subminuette.
Elliott Wave ka 5-3 count market psychology ko capture karta hai, aur yeh bata hai ki prices kaise waves mein move karti hain. Jab market uptrend mein hota hai, toh woh 5 waves mein badhta hai—isko impulse phase kehte hain. Phir jab correction ata hai, toh 3 waves mein niche jata hai—yeh corrective phase hai. Yeh pattern fractal hai, matlab har timeframe pe repeat hota hai—daily chart pe jo 5-wave impulse dikh raha hai, woh hourly chart pe aur chote 5-wave impulse se bana hua hai.
Impulse phase (5 waves) mein pehli wave mein smart money entry leti hai, dosri wave mein thoda profit booking hota hai (lekin price start se niche nahi jati), tesri wave sabse strong hoti hai jahan crowd FOMO ke saath enter karti hai, chauthi wave mein consolidation hota hai (lekin yeh pehli wave ke high se overlap nahi karti), aur panchvi wave mein final euphoria hoti hai jahan late buyers aate hain. Corrective phase (3 waves—A, B, C) mein Wave A initial drop hai, W
