As of 01/21/2025   Indus: 44,026 +537.98 +1.2%     Trans: 16,662 +231.20 +1.4%     Utils: 1,030 +17.42 +1.7%     Nasdaq: 19,757 +126.58 +0.6%     S&P 500: 6,049 +52.58 +0.9%	YTD  +3.5%    +4.8%    +4.8%    +2.3%    +2.8%	Targets    Overview: 01/15/2025     44,700 or 41,600 by 02/01/2025   17,200 or 15,700 by 02/01/2025   1,050 or 950 by 02/01/2025   20,500 or 18,670 by 02/01/2025   6,100 or 5,700 by 02/01/2025
Chart Pattern Indicator: on 1/13/25

As of 01/21/2025   Indus: 44,026 +537.98 +1.2%     Trans: 16,662 +231.20 +1.4%     Utils: 1,030 +17.42 +1.7%     Nasdaq: 19,757 +126.58 +0.6%     S&P 500: 6,049 +52.58 +0.9%	YTD  +3.5%    +4.8%    +4.8%    +2.3%    +2.8%
Targets    Overview: 01/15/2025     44,700 or 41,600 by 02/01/2025   17,200 or 15,700 by 02/01/2025   1,050 or 950 by 02/01/2025   20,500 or 18,670 by 02/01/2025   6,100 or 5,700 by 02/01/2025
Chart Pattern Indicator: on 1/13/25

Bulkowski on the Basic Elliott Wave Pattern

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

Shown is the basic five wave motive phase (as opposed to the three wave corrective phase) of the Elliott wave principle. Price moves in a rise-retrace pattern that is similar to an incoming tide. Notice in the chart to the right that the impulse waves, 1, 3, and 5 travel farther than the corrective waves 2 and 4. This behavior leads to a rising price trend in this example.

Reference the figure to the left Three of the waves, 1, 3, and 5, move in the direction of the trend of one higher degree (the blue numbers 1 through 5). This is similar to an ocean's tide. If you are looking at a ripple, one higher degree would be the wave. One higher degree from a wave would be the tide.

Counter trend moves 2 and 4 interrupt the movement of the main thrust.

The orientation of the basic 5 wave cycle need not be one of a rising price trend. The chart to the right shows a 5 wave pattern in a falling price trend. As described above, the 5 wave cycle obeys the direction of the trend of one higher degree. In the middle chart of the three on this page, each segment of the A wave is composed of 5 smaller segments, not 3 as in an ABC correction.

Basic Motive Wave Pattern: Rules

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

• The motive phase is composed of five waves, three advancing (1, 3, 5) and two counter trend waves, 2 and 4.
• Motive waves can head up or down.
• The motive phase aligns with the trend of one higher degree.
• Wave 2 never moves beyond the start of wave 1.
• Wave 3 is never the shortest wave.
• Wave 4 never overlaps the end of wave 1.
• Waves 2 and 4 tend to alternate in form. If wave 2 is a zigzag, wave 4 will be a flat, for example.
• One of the waves, 1, 3, or 5, will often (but not always) be much longer (extended) than the other two.

-- Thomas Bulkowski

See Also

• Here is the main resource for Elliott wave information.
• Support and resistance. Learn the various types.
• Market direction. 7 tips to determining.
• Trading cycles help time your entries and exits.
• Trend change detection using a triangle apex.

Excess is never too much in moderation.