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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. He may be reached at

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Bulkowski's Elliott Wave Principle

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 04/17/2014
16,409 -16.31 -0.1%
7,634 42.88 0.6%
543 -5.75 -1.0%
4,096 9.29 0.2%
1,865 2.54 0.1%
YTD
-1.0%
3.2%
10.7%
-1.9%
0.9%
Tom's Targets    Overview: 04/11/2014
16,600 or 15,900 by 05/01/2014
7,700 or 7,150 by 05/01/2014
560 or 530 by 05/01/2014
4,250 or 3,900 by 05/01/2014
1,900 or 1,800 by 05/01/2014
Mutt Winners: None YTD

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 patterns.

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.

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.
Extension
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 wave 5.
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.
Overlap
When wave four moves into the territory of wave one. By definition, this cannot happen in an impulse wave.
Subwaves
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

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Copyright © 2008-2013 by Thomas N. Bulkowski. All rights reserved. Beauty is in the eye of the beer holder.