Motive (Impulse) Waves: Technical Analysis Training

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Motive (Impulse) Waves 

Effect of Motive Waves 

The most common motive wave is an impulse. Motive waves separated into five waves with certain peculiar and always move in the same direction as the trend of one larger degree. They are straightforward and comparably easy to recognize and clarify.

Within motive waves, wave 2 never retraces more than 100% of wave 1, and wave 4 never retraces more than 100% of wave 3. Wave 3, moreover, always travels beyond the end of wave 1. The goal of an impulse is to make progress, and these rules of formation assure that it will.

Elliott further discovered that in price terms, wave 3 is repeatedly the longest and never the shortest among waves 1, 3 and
5. As long as wave 3 endure a greater percentage movement than either wave 1 or 5, this rule is satisfied. It almost always holds on an arithmetic basis as well. There are two types of motive waves: impulses and diagonal triangles

The most common motive wave is an impulse. In this, wave 4 does not enter the territory of “overlap” wave 1. This rule holds for all non-leveraged cash basis markets. Futures markets, with their extreme leverage, can induce short term price extremes that would not occur in cash markets. Even so, overlapping is frequently confined to daily and intraday price variation and even then is extremely rare. In addition, the actionary subwaves (1, 3 and 5) of an impulse are themselves motive, and subwave 3 is specifically an impulse. Figures 2, 3 and 4 all depict impulses in the 1, 3, 5, A and C wave positions.

It the above four pessage, there are only a few simple guidelines for depict impulses identically. A guideline is so called because it governs all waves to which it applies. Typical, yet not inevitable, peculiarity of waves are called guidelines, which are discussed in an upcoming section. A rule should never be disregarded. In many years of practice with countless patterns, the authors have found but one instance above Subminuette degree when all other rules and guidelines combined to suggest that a rule was broken. Analysts who routinely break any of the rules detailed in this section are practicing some form of analysis other than that guided by the Wave Principle. These rules have great practical utility in correct counting, which we will explore further in discussing extensions.

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A truncated fifth wave does not move beyond the end of the third. It can frequently be verified by noting that the presumed fifth wave contains the necessary five subwaves, as illustrated in Figures3. Truncation gives warning of underlying weakness or strength in the market. In application, a truncated fifth wave will often cut short an expected target. This annoyance is counterbalanced by its clear implications for persistence in the new direction of  trend.

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