Elliot Waves free learning course – Lesson3

Three basic principles for Elliott

There are principles that must be taken into consideration when you numbering Elliott to be correct because when you deal with empty chart and number it for the first time, you must take into consideration the three basic principles

1. The third wave can’t be smallest driving wave between three driving ones 1, 3 and 5.

2. The second correction wave cannot be the first to reach the bottom of the first wave.

3. The corrective fourth wave cannot touch the first wave.

Those three golden rules are the rules when you analyze Elliott waves on the chart and cannot be violated, and never in the case of violation of are you numbering for these terms to know that you’re numbering wrong.

There are also some things must be taken into consideration when you numbering Elliott:

1. When numbering Elliott, you should start from the chart with the top duration and then down to the next chart and so on (begin monthly analysis and then down on the weekly and so on).

2. Sometimes the fifth driving wave can’t exceed the summit of the third wave and we call this phenomenon drop out.

3. The third wave often is the largest driving waves as it is often extended and sharp.

4. There is what is known as the exchange which is based on the corrective wave 2 and 4, often one of them comes sharp and simple (one movement to the bottom), and the second comes intricately (side movement up and down) and the exchange is done between them, if 2 came simple 4 is complex and if it 2 comes complex 4 is simple and so on.  

5. Corrective waves 2 and 4 are often corrected on the Fibonacci ratios of waves 1 and 3.

6. There is a driving wave of 1, 3 and 5, which is often stretched and larger than the two others.