The Three Elliott Wave Rules
These three rules are most relevant to daily closing data.
1. Wave-2 should not exceed the beginning of Wave-1. In other
words, Wave-2 should not make greater than a 100%
retracement of Wave-1.
2. Wave-3 should not be the shortest of the three impulse
waves in a five-wave impulse trend (waves 1, 3 and 5).
3. Wave-4 should not make a daily close into the closing range
of the Wave-1.
These rules are extremely helpful to confirm or invalidate a potential
pattern. Even when using intraday data, be aware of the pattern and
guidelines relative to the daily closing data.
Why is pattern analysis an important part of the Dynamic Trading
approach to technical analysis?
1. Pattern analysis helps us to determine if a market is in a trend or
counter-trend.
2. Pattern analysis helps us to determine the position of the market
within a trend or counter-trend.
3. Pattern analysis helps us to project the time and price objectives of the
current trend or counter-trend.
Read next >>> Several pattern examples.
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