Elliott Wave Theory Cheat Sheet
Wave Degree: Notation and Nomenclature
Fibonacci
Wave 1
Wave 2
Usually retrace 0.5 to 0.618 of wave 1
Wave 3
Usually extends wave 1 by at least 1.618
Wave 4
Usually retrace wave 3 by 0.38 to 0.5
Wave 5
Wave A
Wave B
Wave C
Often equals wave A in a zigzag
A Branching Hierarchy of Elliott Wave Forms
A Summary of Rules and Guidelines for Waves
Terms
Progressive wave: Any motive wave upward not within a corrective wave
Regressive wave: Any declining wave regardless of mode.
Proregressive wave: Any upward wave regardless of mode within a correction.
Motive Waves
Impulse
An impulse wave is a 5-3-5-3-5 wave pattern that contains no overlap.
Rules
An impulse always subdivides into five waves.
Wave 1 always subdivides into an impulse or (rarely) a diagonal.
Wave 2 always subdivides into a zigzag, flat or combination.
Wave 2 never moves beyond the start of wave 1.
Wave 3 always moves beyond the end of wave 1.
Wave 3 is never the shortest wave.
Wave 3 always subdivides into an impulse.
Wave 4 never moves below the end of wave 1.
Futures markets may have brief crossovers
Wave 4 always subdivides into a zigzag, flat, triangle or combination.
Wave 5 always subdivides into an impulse or a diagonal.
In commodities wave 5's tend to be the longest
Never are waves 1, 3, and 5 all extended.
Guidelines
Wave 2 is usually a zigzag or zigzag combination.
The center of wave 3 almost always has the steepest slope of any equal period within the parent impulse except that sometimes an early portion of wave 1 (the "kickoff") will be steeper.
Wave 4 will almost always be a different corrective pattern than wave 1
Wave 4 is usually a flat, triangle or flat combination.
Sometimes wave 5 does not move beyond the end of wave 3 (in which case it is called a truncation).
Wave 5 often ends when meeting or slightly exceeding a line drawn from the end of wave 3 that is parallel to the line connecting the ends of waves 2 and 4, on either arithmetic or semilog scale.
Wave 1, 3, or 5 is usually extended. (An extension appears "stretched" because its corrective waves are smaller compared to its impulse waves. It is substantially longer, and contains large subdivisions, than the non-extended waves).
Often, the extended subwave is the same number (1, 3, or 5) as the parent wave.
Rarely do two subwaves extend, although it is typical for waves 3 and 5 both to extend when they are of Cycle or Supercycle degree and within a fifth wave of one degree higher.
Wave 1 is the least commonly extended wave.
When wave 3 is extended, waves 1 and 5 tend to have gains related by equality or the Fibonacci ratio.
When wave 5 is extended, it is often in Fibonacci proportion to the net travel of waves 1 through 3.
When wave 1 is extended, it is often in Fibonacci proportion to the net travel of waves 3 through 5.
Wave 4 typically ends when it is within the price range of subwave four of 3 [typically near its terminus].
Wave 4 often subdivides the entire impulse into Fibonacci proportion in time and/or price.
Diagonal
Rules
A diagonal always subdivides into five waves.
An ending diagonal always appears as wave 5 of an impulse or wave C of a zigzag or flat.
A leading diagonal always appears as wave 1 of an impulse or wave A of a zigzag.
Waves 1, 2, 3, 4, and 5 of an ending diagonal, and waves 2 and 4 of a leading diagonal, always subdivide into zigzags.
Wave 2 never goes beyond the start of wave 1
Wave 3 always goes beyond the end of wave 1.
Wave 4 never moves beyond the end of wave 2.
Wave 4 always ends within the price territory of wave 1.
Going forward in time, a line connecting the ends of waves 2 and 4 converges towards (in the contracting variety) or diverges from (in the expanding variety) a line connecting the ends of waves 1 and 3.
In a leading diagonal, wave 5 always ends beyond the end of wave 3.
In the contracting variety, wave 3 is always shorter than wave 1, wave 4 is always shorter than wave 2, and wave 5 is always shorter than wave 3
In the expanding variety, wave 3 is always longer than wave 1, wave 4 is always longer than wave 2, and wave 5 is always longer than wave 3.
In the expanding variety, wave 5 always ends beyond the end of wave 3.
Guidelines
Waves 2 and 4 each usually retrace 0.66 to 0.81 of the preceding wave.
Waves 1, 3, and 5 of a leading diagonal usually subdivide into zigzags but sometimes appear to be impulses.
Within an impulse, if wave 1 is a diagonal, wave 3 is likely to be extended.
Within an impulse, wave 5 is unlikely to be a diagonal if wave 3 is not extended.
In the contracting variety, wave 5 usually ends beyond the end of wave 3. Failure to do so is called a truncation.
In the contracting variety, wave 5 usually ends at or slightly beyond a line that connects the ends of waves 1 and 3. Ending beyond that line is called a throw-over.
In the expanding variety, wave 5 usually ends slightly before reaching a line that connects the ends of waves 1 and 3.
Corrective Waves
A corrective wave is a three-wave pattern or combination of three-wave patterns that move in the opposite direction of the trend of one larger degree
Additional:
Corrections are never fives. (p. 41)
Two styles:
Sharp corrections always angle against the larger trend.
Sideways corrections typically carry back to or beyond it's starting level.
Corrections, especially when they themselves are fourth waves, tend to register their maximum retracement within the span of travel of the previous fourth wave of one lesser degree, most commonly near the level of its terminus.
ZigZag (5-3-5)
Rules
A zigzag always subdivides into three waves.
Wave A always subdivides into an impulse or leading diagonal.
Wave B always subdivides into a zigzag, flat, triangle or combination thereof.
Wave B never moves beyond the start of wave A.
Wave C always subdivides into an impulse or diagonal.
Guidelines
Wave A almost always subdivides into an impulse.
Wave C almost always subdivides into an impulse.
Wave C is often about the same length as wave A.
Wave C almost always ends beyond the end of wave A.
Wave B typically retraces 38% to 39% of wave A
If wave B is a running triangle, it will typically retrace between 10% and 40% of wave A.
If wave B is a zigzag, it will typically retrace 50% to 79% of wave A.
If wave B is a triangle, it will typically retrace 38% to 50% of wave A
A line connecting the ends of waves A and C is often parallel to a line connecting the end of wave B and the start of wave A.
Forecasting guideline: Wave C often ends upon reaching a line drawn from the end of wave A that is parallel to a line connecting the start of wave A and the end of wave B.
Flat (3-3-5)
Rules
A flat always subdivides into three waves.
Wave A is never a triangle.
Wave B always retraces at least 90% of wave A.
Wave C is always an impulse or a diagonal.
Guidelines
Wave B usually retraces between 100% and 138% of wave A
Wave C is usually between 100% and 165% as long as wave A
Wave C usually ends beyond the end of wave A.
Notes
When wave B is more than 105% as long as wave A and wave C ends beyond the end of wave A, the entire formation is called an expanded flat.
When wave B is more than 100% as long as wave A and wave C does not end beyond the end of wave A, the entire formation is called a running flat.
Triangles
Contracting Triangle
Rules
A triangle always occurs in a position prior to the final actionary wave of one larger degree (i.e., wave 4 in an impulse or wave B in an A-B-C correction or the final X in a double or triple zigzag or combination).
A triangle always subdivides into five waves.
At least four waves among waves A, B, C, D, and E each subdivide into a zigzag or zigzag combination.
Wave C never moves beyond the end of wave A, wave D never moves beyond the end of wave B, and wave E never moves beyond the end of wave C. The result is that going forward in time, a line connecting the ends of waves B and D converges with a line connecting the ends of waves A and C.
A triangle never has more than one complex subwave, in which case it is always a zigzag combination or a triangle.
Guidelines
Usually, wave C subdivides into a zigzag combination that is longer lasting and contains deeper percentage retracements than each of the other subwaves.
Sometimes, wave D subdivides into a zigzag combination that is longer lasting and contains deeper percentage retracements than each of the other subwaves.
Sometimes one of the waves, usually wave C, D, or E, subdivides into a contracting or barrier triangle. Often the effect is as if the entire triangle consisted of nine zigzags.
About 60% of the time, wave B does not end beyond the start of wave A. When it does, the triangle is called a running triangle.
Barrier Triangle
A barrier triangle has the same characteristics as a contracting triangle except that waves B and D end at essentially the same level. We have yet to observe a 9-wave barrier triangle, implying that this form may not extend.
When wave 5 follows a triangle, it is typically either a brief, rapid movement or an exceptionally long extension.
Expanding Triangle
Rules
Most rules are the same as for contracting triangles with the following differences:
Wave C, D, and E each moves beyond the end of the preceding same-directional subwave. (The result is that going forward in time, a line connecting the ends of waves B and D diverges from a line connecting the ends of waves A and C.)
Subwaves B, C, and D each retrace at least 100% but no more than 150% of the preceding subwave.
Guidelines
Most guidelines are the same with the following differences:
Subwaves B, C, and D usually retrace 105% to 125% of the preceding subwave.
No subwave has yet been observed to subdivide into a triangle.
Combinations
Rules
Combinations comprise two (or three) corrective patterns separated by one (or two) corrective pattern(s) in the opposite direction, labeled X. (The first corrective pattern is labeled W, the second Y, and the third, if there is one, Z).
A zigzag combination comprises two or three zigzags (in which case it is called a double or triple zigzag).
A "double three" flat combination comprises (in order) a zigzag and a flat, a flat and a zigzag, a flat and a flat, a zigzag and a triangle or a flat and a triangle.
A rare "triple three" flat combination comprises of three flats.
Double and triple zigzags take the place of zigzags and double and triple threes take the place of flats and triangles.
An expanding triangle has yet to be observed as a component of a combination.
Guidelines
When a zigzag or flat appears too small to be the entire wave with respect to the preceding wave (ir, if it is to be wave 4, the preceding wave 2), a combination is likely.
Resources
Visual Guide to Elliott Wave Trading - by Wayne Gorman, Jeffrey Kennedy
Elliott Wave Principle: Key to Market Behavior - by Robert R Prechter, A J Frost, Charles J Collins