As of 12/20/2024   Indus: 42,840 +498.02 +1.2%     Trans: 15,892 +32.54 +0.2%     Utils: 986 +14.76 +1.5%     Nasdaq: 19,573 +199.83 +1.0%     S&P 500: 5,931 +63.77 +1.1%	YTD  +13.7%   0.0%    +11.9%    +30.4%    +24.3%	Targets    Overview: 12/12/2024     44,200 or 41,750 by 01/01/2025   16,100 or 17,700 by 01/01/2025   1,050 or 975 by 01/01/2025   20,500 or 19,300 by 01/01/2025   6,100 or 5,775 by 01/01/2025
Chart Pattern Indicator: on 12/5/24

As of 12/20/2024   Indus: 42,840 +498.02 +1.2%     Trans: 15,892 +32.54 +0.2%     Utils: 986 +14.76 +1.5%     Nasdaq: 19,573 +199.83 +1.0%     S&P 500: 5,931 +63.77 +1.1%	YTD  +13.7%   0.0%    +11.9%    +30.4%    +24.3%
Targets    Overview: 12/12/2024     44,200 or 41,750 by 01/01/2025   16,100 or 17,700 by 01/01/2025   1,050 or 975 by 01/01/2025   20,500 or 19,300 by 01/01/2025   6,100 or 5,775 by 01/01/2025
Chart Pattern Indicator: on 12/5/24

Bulkowski on Wave Three Extension Elliott Wave Pattern

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

The figure to the right shows what a wave three (third 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 three is extended, then the subwaves in wave three will resemble the subwaves in waves one and five.

Four subwaves join wave three to total five subwaves and complete the extension. I show wave three of higher degree as a red line and subwaves in black. Knowing that wave three extends suggests waves one and five will be normal length.

The chart on the right is the same as the prior one, but the wave occurs in a bear market. The extended wave three 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 three is extended, then subwave three within wave three can be extended. Thus, wave three will have nine subwaves instead of five.

Wave Three Extension Rules

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

• The wave three extension is a motive wave composed of nine sub waves, each appearing similar in shape and duration.
• If an extension occurs on wave three, then waves one and five 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 wave.

-- 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.

EARTH FIRST! We'll strip-mine the other planets later.