Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30 years of stock market experience and widely regarded as a leading expert on chart patterns. His books, including the best selling Encyclopedia of Chart Patterns, have been translated into many languages. He may be reached at

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Bulkowski's Wave Five Extension

Market

Industrials (^DJI):

Transports (^DJT):

Utilities (^DJU):

Nasdaq (^IXIC):

S&P 500 (^GSPC):

As of 05/24/2013

15,303 8.60 0.1%

6,396 -34.09 -0.5%

499 -5.30 -1.1%

3,459 -0.28 0.0%

1,650 -0.91 -0.1%

YTD

16.8%

20.5%

10.2%

14.6%

15.7%

Tom's Targets Overview: 05/14/2013

15,500 or 14,850 by 06/01/2013

6,750 or 6,200 by 06/01/2013

525 or 490 by 06/01/2013

3,600 or 3,300 by 06/01/2013

1,700 or 1,600 by 06/01/2013

Test Portfolios and CPI

Indus. strength: -1.3%

Mutt Losers: 4.8%

Mutt Winners: -2.1%

Wilder RSI: 25.9%

CPI:

on 05/22/2013

This page describes the wave five extension pattern of the Elliott wave principle, how price moves not in a straight line but in a series of rises and retracements.

The wave five extension in a bull market. The figure to the right shows what a wave five (fifth wave) extension looks like in a bull market. An extension is an unusually long impulse wave with exaggerated subwaves, according to Frost and Prechter. Many impulses contain only one extension in their actionary subwaves. That is, only one of the waves one, three, or five, will be extended. When an extension occurs, it will likely occur during wave three. The subwaves within an extension have nearly the same duration and amplitude as the ones in the rest of the wave. That means if wave five is extended, then the subwaves in wave five will resemble the subwaves in waves one and three.

Four subwaves join wave five to total five subwaves and complete the extension. I show wave five of higher degree as a red line and subwaves in black. Knowing that waves one and three are normal length, then it is a safe bet that wave five will extend (or you have counted wrong).

The wave five extension in a bear market. The chart to the right is the same as the prior one, but the wave occurs in a bear market. The extended wave five of higher degree appears in red (shown this way to highlight the wave length), but it really is composed of the black subwaves.

An extension can occur within an extension. For example, if wave five is extended, then subwave three within wave five can be extended. In other words, extended wave five will have nine subwaves instead of five.

Wave Five Extension Rules

The wave five extension has rules that govern its shape. They are listed here.

The wave five extension is a motive wave composed of nine sub waves, each appearing similar in shape and duration.
If an extension occurs on wave five, then waves one and three will be normal waves, not extensions.
Most impulse waves contain extensions (either wave one, three, or five will be extended).
An extension can, itself, be extended (an extension within an extension).
Wave three is the most commonly extended wave.
Wave four cannot overlap wave one.
Wave three is never the shortest actionary wave.

-- Thomas Bulkowski

Bulkowski's Wave Five Extension

Wave Five Extension Rules

See Also