Wave 1 Characteristics

Wave 1 Structure

Wave 1 impulse and diagonal diagram

Confirmation of Wave 1

Confirmation always requires movement beyond prior pivots.

Confirmation of Wave 1 by Failed New High/Low

At times, the expected Wave one will quickly retest the wave 5 pivot. This is generally true on shorter term intraday charts. This retest is actually wave 2 of a smaller degree, but can serve as initial confirmation that Wave 1 is in progress.  Using this as a basis for trading is beneficial in three respects.  First, the wave 5 pivot where you put your stop loss is substantially closer.  If your wave count is wrong, you can limit yourself to a much smaller loss.  Second, if you buy after crossing the wave B pivot (our second method of confirmation) you run the risk of a significant draw down if the wave 2 does a deep retracement.  It is much more likely there will be angst, even if your wave count is right.  And if it is wrong, you stand to lose a lot more money.  Finally, wave 1 may develop in such a way that you are comfortable taking profit at the wave 1 pivot, but would not be be in a position to do so if you had entered the trade at the wave B pivot.  That is, it is much easier to take profit, sit out the wave 2, and reenter the trade at a much better price. 

Wave 1

Confirmation of Wave 1 By Clearing Wave B of the Correction

From a strictly Elliott Wave perspective, confirmation that Wave 1 is in progress occurs after clearing Wave B of the prior correction.  However, we like the failed new low / failed new high approach much better.

Wave 1

Until Confirmation, Alternate Counts Include:

Trading Wave 1

Entering the Trade

Predictions for Wave 1

  • Wave 1 is difficult to predict in both price and time. As a general rule, you can expect wave 1.1 to reach the pivot of wave 3 in the preceeding wave C. In a clean formation, the W1 target can be estimated once W1.1 is finished. Since we know the expected W1.2 retracement (.618), the presumed length of W1.3 (1.618), the expected retracement of W1.4 (.382) and that W1.5 is expected to be equal to W1.1, thee W1.1 pivot should be approximately .382 of the total length of the wave. Therefore, an estimate can be made that the total length of W1 will be 2.618 times the distance of W1.1.

Wave 1

Wave 1 Extensions

  • An impulse, wave 1 is the least common extended wave EXCEPT when it is wave 1 of a larger degree wave 1.  With larger degree 1st waves (Intermediate and above), it is common for Wave 1.1 to extend.

Using Indicators with Wave 1

Be sure to review our Introduction to using TA Indicators with Elliott Waves..

Non-extended Wave 1 Indicator Signatures

Wave 1