Impulse & Corrective Waves

Every market move is either an impulse (motive) or a correction. Understanding both is key to wave counting.

The Complete Cycle

A full Elliott Wave cycle consists of 8 waves:

5 motive waves (1-2-3-4-5) in the trend direction
3 corrective waves (A-B-C) against the trend

Interactive: Click on any wave label to learn more

Impulse Waves (1-2-3-4-5)

Impulse waves move with the dominant trend. They follow strict rules:

The 3 Cardinal Rules

Wave 2 cannot retrace more than 100% of Wave 1
Wave 3 is never the shortest of Waves 1, 3, and 5
Wave 4 cannot overlap with Wave 1's territory (in most cases)

Wave Characteristics

Wave 1 — The start of a new trend. Often hard to identify in real-time. Small, uncertain. Smart money enters here.

Wave 2 — A pullback that tests conviction. Typically retraces 50-61.8% of Wave 1. Often deep but can never exceed Wave 1's starting point.

Wave 3 — The most powerful wave. Usually the longest and strongest. This is where the crowd joins in. Often extends to 161.8% or 261.8% of Wave 1.

Wave 4 — A consolidation/correction. Typically shallow, retracing 23.6-38.2% of Wave 3. Alternates in character with Wave 2 (if Wave 2 was sharp, Wave 4 tends to be flat, and vice versa).

Wave 5 — The final push. Often shows divergence on indicators (RSI, MACD). Can be strong or truncated. This is where the last buyers/sellers enter before reversal.

Corrective Waves (A-B-C)

Corrective waves move against the dominant trend. They're more complex and can take many forms:

Simple Corrections

Zigzag (5-3-5): Sharp, impulsive correction. A and C are impulse waves, B is corrective.
Flat (3-3-5): Sideways correction. Waves A and B are roughly equal, C makes the final thrust.
Triangle (3-3-3-3-3): Converging price action. Five waves labeled A-B-C-D-E.

Wave A

First leg against the trend. Often mistaken for a pullback.

Wave B

A counter-move that traps traders into thinking the trend resumed. Can retrace up to (and sometimes beyond) the start of Wave A.

Wave C

The final corrective leg. Often powerful and impulsive. Usually equals the length of Wave A.

Fibonacci Relationships

| Wave | Common Extension/Retracement | |------|------------------------------| | Wave 2 | 50%, 61.8%, 78.6% of Wave 1 | | Wave 3 | 161.8%, 200%, 261.8% of Wave 1 | | Wave 4 | 23.6%, 38.2% of Wave 3 | | Wave 5 | 61.8%, 100% of Wave 1 | | Wave C | 100%, 161.8% of Wave A |

Key Takeaway

Impulse waves give you the trend. Corrective waves give you the entry. Learn to identify both and you'll always know where you are in the cycle.