Bulkowski's Elliott Wave Principle
S&P 500 (^GSPC):
As of 05/23/2013
15,295 -12.67 -0.1%
6,430 13.53 0.2%
505 -2.95 -0.6%
3,459 -3.88 -0.1%
1,651 -4.84 -0.3%
or 14,850 by 06/01/2013
or 6,200 by 06/01/2013
or 490 by 06/01/2013
or 3,300 by 06/01/2013
or 1,600 by 06/01/2013
Written by and copyright © 2008-2013 by Thomas N. Bulkowski. All rights reserved.
This is the main gateway for information on chart patterns that make up the Elliott wave principle. Much of what you will see here is described in
detail in the book,
Elliott Wave Principle, by Frost and Prechter. I am not suggesting that you buy this book, but that's where I found the
Ralph Nelson Elliott, in the 1930s, discovered what is now called the Elliott Wave Principle. He uncovered thirteen basic patterns or waves that describe how markets
trend and reverse on a repetitive basis. By linking the patterns together in different combinations, you can create larger versions of the patterns. In this way, the method is
said to be fractal. Each wave is composed of smaller waves, like the tide is composed of advancing and receding waves and those waves are composed of ripples. The technique
was meant to forecast turning points in the market averages.
The following Elliott wave patterns are listed alphabetically, followed by a glossary of terms used on these pages.
- 8 wave cycle
- Basic motive phase
- Corrective phase
- Flat (3-3-5)
- Flat, expanded
- Flat, running
- Triangle, ascending
- Triangle, descending
- Triangle, ending diagonal (wedges)
- Triangle, leading diagonal (wedges)
- Triangle, reverse symmetrical (broadening)
- Triangle, running
- Triangle, symmetrical
- Wave extension, first
- Wave extension, third
- Wave extension, fifth
- Wave extension, unknown
- Zigzag, double
Elliott Wave Principle Glossary of Terms
- Actionary waves
- Actionary waves or trend waves are those whose direction agrees with the trend of one higher degree of
which it is a part.
- Corrective waves
- Corrective waves retrace prior gains or interrupt the primary trend as opposed to motive waves
that propel price movement. Corrective waves have a three wave structure or a combination of three
waves. They are more difficult to recognize because they come in many variations, such as zigzags,
flats, and triangles. They can be strung together to create complex corrections. In impulse waves
2 and 4, the configuration tends to alternate and not repeat (a zigzag as wave 2 followed by a
zigzag for wave 4) for example. If you see a flat as wave 2, a zigzag will appear as wave 4.
- An extension is an unusually long wave, composed not of 5 subwaves but 9 (or even more, like 13).
In the 1, 3, or 5 wave sequence, only one of the waves will be an extension. Thus, if wave 1 extends,
then waves 3 and 5 will be normal length. If waves 1 and 3 are normal, then look for a long move on
- Impulse wave
- A five wave pattern with subwaves 5-3-5-3-5 and no overlap between waves one and four.
- Motive waves
- Motive waves are those that propel the market as opposed to corrective ones that retrace prior gains
or interrupt the primary trend. Motive waves have a five wave structure or a combination of a five wave
structure. They obey the rules that subwave 4 will not overlap subwave 1, and subwave 3 is not the shortest
wave. Wave 2 will not retrace all of wave 1, and wave 4 will not retrace all of wave 3. Wave 3 always
travels beyond the end of wave 1. Wave 3 is often the longest wave of waves 1 and 5.
Motive waves often follow a trend channel -- two roughly parallel lines of trend. One of the subwaves,
1, 3, or 5, is usually longer (extended) than the others.
- One higher degree
- If you were a wave of water, then a wave of one higher degree would be the tide. On the price chart, if you were
a subwave, then a wave would be one degree higher. Think of it like a camera. If you zoom in, you see the subwaves.
When you zoom out, you see the waves.
- When wave four moves into the territory of wave one. By definition, this cannot happen in an impulse wave.
- A subwave is the smaller price movements that make up a wave. If you were a wave of water, then a subwave would be a ripple.
If you were a camera, you would zoom in to see the subwaves and zoom out to see the waves.
-- Thomas Bulkowski
Copyright © 2008-2013 by Thomas N. Bulkowski. All rights reserved. Beauty is in the eye of the beer holder.