Elliott Wave Cheat Sheets
This is a list of other helpful sources on Elliott Wave Theory
Wave 4 must not enter the price
territory of wave 1 (except in a
- Can you have a very slight
overlap without violating the rule?
Yes. This is not really an exception
to the rule, but rather the manner
in which the rule is defined.
developed the wave theory using a
close only price chart, not HLC or
candlestick charts. Wicks did not
come into consideration.
Therefore, unless the price of wave
4 enters the body of the Wave 1
pivot, there has been no violation
of the rule. This mode of
interpretation may further be
warranted given that trading is
highly computerized these days and
the enemy computers will clearly "gun" for the stops people place
immediately inside of the wave 1
because of this rule.
- If W4 violates the rule that it
can never overlap with W1, you must
now re-label the waves so as to
adhere to the rules and guidelines.
Most importantly, you must do so in
a manner that does not reflect any
bias as to the direction you would
prefer. What is the next most
probable formation. Generally,
this translates into what is the simplest formation.
- As with all wave counts, when selecting your alternative count, avoid grasping at the rare formations to form an answer.
Yes, ending diagonals and triple Zigzags do occur, but you shouldn't
immediately jump to the conclusion
that it must be a complex or rare formations as
your answer. You should always
be forced into selecting one of the rare formations because nothing
- Alternative counts
- A 1-2 /
1-2 formed and you are in the second W2 rather than
a Wave 4.
- It is an
W5 - (W4
and you are
in W5.) These are pretty rare, so not likely the probable answer.
- W4 is
Zigzag. A double and triple are pretty rare, therefore not the most probable explanation.
- It's not
but an A,B,C
and you are
- Standard Stochastics (14) will tend to pull down to the Bullish reversal level, between 40 and 50.
- MACD will tend to pull down to do a ZLR (Zero Line Reversal), although that is much more common
with Wave 4.
- Can you trade Wave 4?
Sure, but there are a lot of good
reasons not to. Complex
corrections and triangles thrive in
W4, so if you want to trade it you
need to learn to ignore your
indicators and be on your toes and
prepared to hold on for the ride.
- When W4 violates the overlap
rule with W1, you must reject the
current count. You have 3
- 1. It is an
Ending Diagonal, not an impulse
wave. - If your wave 1,2,3
structure is not comprised of 3
waves each, reject this.
- 2. What you thought
was waves 1-3 is actually an X wave.
You are not in a motive wave at
all but rather a
Your expected wave 4 is actually
wave A of the Y leg of the
- 3. Instead of being
1,2,3,4 you are really in a
1-2/1-2 setup for a strong move.
Does the setup appear to be a
1-2/1-2? Check here.12_12_elliott_waves.html
- , you
should immediately consider Waves
actually be Wave X in a complex
correction. The expected W4 is
actually Wave A in the next
corrective sequence and there is
more counter-trend correction to
- When W4 takes greater than 4x
the time traveled in W2, it is far
more likely that what you are
labeling as W4 is actually W2 of a
larger structure. Don't
blindly accept a huge W4 when
compared to a small W2.
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