Lesson 3

What is an Impulse wave?

What are the Impulse wave rules? (Most important lesson to take from today)

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In Lesson 2 we spoke the difference between an Impulse Wave and a Corrective Wave, we went into a lot of detail on what to look for between both types of waves. Today and in our next lesson, I just want to focus on the Impulse Wave.

The Impulse Waves come in four different patterns: 

1. The Normal Impulse Wave

2. The Extended Impulse Wave

3. The Leading Diagonal Wave

4. The Ending Diagonal Wave.

Each pattern has its own rules but generally they all follow a similar framework that tends to repeat itself. 

So today we will keep it nice and simple and just look at the Normal Impulse Wave and the rules associated with this.

Knowing these rules today will really help you understand Elliott Wave Theory and how a chart can become invalid when one of these rules is violated.

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What is an Impulse wave? 

It consists of five waves, labeled 1, 2, 3, 4, and 5, and represents a strong movement in one direction (upward or downward). Here’s a simple breakdown:

1. Wave 1: A strong move in the main direction of the trend.
2. Wave 2: A corrective wave that retraces a portion of Wave 1, but not all.
3. Wave 3: Another strong move in the direction of the trend, usually the longest and strongest wave.
4. Wave 4: A corrective wave that retraces a portion of Wave 3, but not as deep as Wave 2.
5. Wave 5: The final push in the direction of the trend before a larger correction begins.

So, in an uptrend, an impulse wave will have three upward moves (Waves 1, 3, and 5) and two smaller corrections (Waves 2 and 4). In a downtrend, it will have three downward moves and two smaller corrections.

Each of these five waves of the impulse wave can, in turn, be broken down into their own smaller wave patterns, giving rise to a fractal structure – patterns within patterns – that is one of the hallmarks of Elliott Wave Theory.

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What are the Impulse wave rules?

RULE  #1  -  Wave 2 never falls below the starting point of Wave 1.

RULE #2 -  Wave 3 is often the longest wave, but never the shortest of the waves 1-3-5. Wave 3 can be shorter than wave 1 or wave 5, but can't be shorter than both.

RULE #3 - Wave 4 can't enter Wave 2 territory.

These rules are vital for you to understand and they are very straight forward.

So for example, Rule # 1, If Wave 2 falls below the starting point of Wave 1, what does that mean?.....it means that it is not the start of an impulse wave yet and the count is likely still in a corrective wave down.

E.g. Rule # 3, What if Wave 4 enters Wave 2 territory? what does that mean for the impulse wave count?.....it generally means that the count becomes invalid and it is not an impulse wave, this could be another corrective ABC count. There are two exceptions to this and I will be talking about this in our next lesson.

Rule # 1 and Rule # 3 are the most common rules we use to verify an impulse wave, when these rules are adhered to, we can confirm that the trend is in an impulse wave and we look to see where Wave 5 will finish to prepare ourselves for the ABC correction that follows.

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In the Lesson 4, we are going to look at more Impulse Waves:

1.  Extended Waves

2. Leading Diagonal Waves

3. Ending Diagonal Waves.