last modified May, 1997

A Complete List of Elliott Wave Rules and Guidelines

By Richard Swannell

Swannell is the author of the Elliott Wave Analyzer Software Package. EWA is not sold anymore. EWA is now called WinWaves and the rules have been changed by EWI. See also the EW page by Juha Aalto.





Impulse wave


Wave Type: Impulsive
Frequency of Occurrence: Very common
Impulse - Pic

Rules:
  • Wave 1 must be an Impulse or a Diagonal Triangle.
  • Wave 2 can be any corrective pattern, but cannot be Impulsive.
  • Wave 2 cannot be longer than wave 1 in price distance. No part of wave 2 can more than retrace wave 1.
  • Wave 3 must be an Impulse.
  • Considering end points only, wave 3 must be longer than wave 2 in price distance.
  • Wave 4 can be any corrective pattern but cannot be Impulsive.
  • Wave 5 must be an Impulse or a Diagonal Triangle Type 1.
  • Considering the end points only, wave 1 and wave 4 should not overlap by price, except in rare cases by a small margin with leveraged securities such as futures.
  • The internal points of wave 1 and wave 4 can overlap by a small margin.
  • Wave 3 must never be the shortest by price distance (and percentage change) when compared to wave 1 and wave 5.
  • Wave 5 must be at least 38.2% the length of wave 4 by price distance when only considering the end points of both waves.
Guidelines:
  • One of the impulse waves generally extends (is at least 161% longer by price than wave 1 and wave 2)
  • A first wave can be a Diagonal Triangle Type 1, but this is very rare.
  • Wave 2 is usually sharp (a Zigzag, Double Zigzag or Triple Zigzag) and is only very rarely a Triangle.
  • Generally wave 2 and wave 4 retrace at least a 23.6% of the previous wave when all points in the wave are considered (not just the end points).
  • More often than not, wave 2 will retrace wave 1 by about 38.2%, 50% or 61.8% by price distance.
  • Wave 3 can often be 161.8% or 262.8% of wave 1 by price distance.
  • The most likely wave to extend is the 3rd wave of an Impulse. However, in leveraged markets such as commodities and futures, when the Impulse is rising, the most likely wave to extend is the 5th wave.
  • Wave 4 is rarely a sharp (Zigzag based correction).
  • Wave 4 will very often retrace about 38.2% of wave 3 by price distance.
  • No internal point of wave 1 or 2 should overlap with wave 4. However, leveraged markets such as commodities and futures may overlap by a small margin.
  • Waves 2 and 4 usually alternate between a sharp (Zigzag based correction) and a sideways movement (any non Zigzag based correction).
  • Wave 2 will retrace into the price territory of previous wave 4 (of 1 lesser degree) about 80% of the time and most often to the end of wave 4.
  • When the 5th wave is extended, it tends to be about 161.8% of the length from beginning of wave 1 to end of wave 3.
  • When wave 3 is extended and complete, wave 1 and 5 are usually about the same length in time and price.
  • Wave 5 should be at least 61% of wave 4 by price distance.
  • A fifth wave usually has a lower peak volume than a third wave.
  • Wave 5 of an Impulse pattern is most likely to be about 61.8%, 100% or 161.8% the length of wave 1.



Diagonal Triangle Type 1


Wave Type: Impulsive
Frequency of Occurrence: Infrequent
DT1 - Pic

Rules:
  • Wave 1 can be any corrective wave except a Triangle
  • Wave 2 can be any corrective wave
  • Wave 3 can be any corrective wave except a Triangle
  • Wave 4 can be any corrective wave
  • Wave 5 can be any corrective wave
  • Wave 2 must not more than retrace wave 1
  • Wave 3 must be longer than wave 2 by price distance
  • Wave 3 must not be the shortest by price distance when compared with wave 1 and wave 5.
  • The 5th wave must be at least 38.2% the length of wave 4 by price distance
  • Moves within two channel lines, one that connects the end points of waves 1 and 3, and the other that connects the end points of waves 2 and 4. In rare cases the price may move outside these points by up to 15% of the price distance covered by the pattern
  • Waves 2 and 4 must overlap or be within 10% of overlapping in price territory.
  • Wave 5 is never the longest by price distance when compared with wave 1 and wave 3.
  • The intersection of the two channel lines must be beyond the end of the pattern.
  • The two channel lines must either converge or diverge. They cannot be parallel. They must slope in the same direction and neither may be horizontal.
Guidelines:
  • Waves 2 and 4 are both at least a 23.6% retracement of the previous wave. Each point within the wave is considered.
  • The end points of wave 1 and wave 4 nearly always overlap.
  • Diagonals nearly always converge. Diverging diagonals are very uncommon.
  • Waves 2 and 4 should alternate sharp with sideways (Zigzag based pattern with a non-Zigzag based pattern).
  • Wave 2 is often a sharp correction, while wave 4 is often a sideways correction.
  • It is typical for wave 5 to poke through the channel line.
  • Diagonal Triangles are infrequent.
  • A 5th wave should be at least 61.8% of wave 4 by price distance.
  • Wave 2 is rarely a Triangle.
  • It is uncommon for wave 4 or wave 5 to be a Triangle.



Diagonal Triangle Type 2


Wave Type: Impulsive
Frequency of Occurrence: Very Uncommon
DT2 - Pic

Rules:
  • Wave 1 must be an Impulse
  • Wave 2 can be any corrective pattern.
  • Wave 3 must be an Impulse.
  • Wave 4 can be any corrective pattern.
  • Wave 5 can be any Impulsive pattern.
  • Wave 2 must not more than retrace wave 1.
  • This pattern only occurs in a rising market. (A bear market rally).
  • Wave 3 must be longer than wave 2 by price distance.
  • Wave 3 must not be the shortest wave when compared to the price distance of wave 1 and wave 5.
  • Wave 5 must be at least 38.2% the length of wave 4 by price distance.
  • The pattern must move within two channel lines drawn from the end points of waves 1 and 3, and from the end points of waves 2 and 4. The maximum movement outside these channel lines is 15% of the price distance covered by the pattern.
  • Waves 2 and 4 must either share some common price territory or be within 10% of doing so.
  • Wave 5 is never the longest when compared to wave 1 and wave 3.
  • The intersection of the two channel lines must be beyond the end of the pattern
  • The two channel lines must either converge or diverge. They cannot be parallel. They must slope in the same direction and neither may be horizontal
Guidelines:
  • Generally wave 2 and 4 are both at least 23.6% of the previous wave by price distance. Each point within the wave is considered.
  • The end points of waves 1 and 4 generally overlap.
  • Diagonal Triangles nearly always converge. Diverging Diagonal Triangles are very uncommon.
  • Waves 2 and 4 should alternate sharp with sideways (Zigzag based pattern with a non-Zigzag based pattern).
  • Wave 2 is most often a sharp correction, while wave 4 is often a sideways correction.
  • It is typical for wave 5 to poke through the channel line.
  • Diagonal Triangle Type 2 is a very rare pattern.
  • Wave 5 should be at least 61% of wave 4 by price distance.
  • Wave 2 is rarely a Triangle.
  • It is uncommon for wave 4 or wave 5 to be a Triangle.



Zigzag


Wave Type: Corrective
Frequency of Occurrence: Very Common
ZZ - Pic

Rules:
  • Wave A must be an impulse, except in a bear market rally where it can be a Diagonal Triangle Type 2.
  • Wave B can only be a corrective pattern.
  • Wave C must be an Impulse or a Diagonal Triangle Type 1.
  • Wave B must be shorter than wave A by price distance. All internal points are considered.
  • Wave C must by longer than wave B by price distance.
Guidelines:
  • Wave B should end nowhere near beginning of A.
  • Wave C is most likely to be approximately equal to wave A by price distance. The next most likely length for wave C is approximately 61% or 161% of A.
  • If wave C is much longer than 161.8% of A then the pattern is more probably waves 1, 2 and 3 of an Impulse rather than waves A, B and C of a Zigzag.
  • If wave C is more severe (greater slope) than wave A, then expect the pattern to extend to a Double or Triple Zigzag.



Double Zigzag and Double Sideways


Wave Type: Corrective
Frequency of Occurrence: Very Common
DZ - Pic
Note: If wave W and Y are both Zigzags, this pattern is called a
Double Zigzag. If not, it is called a Double Sideways or Double 3.

Rules:
  • Wave W cannot be a Triangle.
  • Wave X can be any correction except for an Expanding Triangle.
  • Wave X must be either larger or smaller than both waves W and X
  • Net direction of the complete pattern must be the same as the direction of wave W
  • Wave Y may be any corrective pattern except an Expanding Triangle.
  • Minimum X wave retracement is 23.6% of the previous wave by price distance.
  • Maximum length of the X wave is about 161% of previous wave by price distance.
Guidelines:
  • The X wave is usually a Zigzag or another Zigzag based pattern.



Triple Zigzag and Triple Sideways


Wave Type: Corrective
Frequency of Occurrence: Relatively Infrequent
TZ - Pic
Note: If wave W and Y and Z are all Zigzags, this pattern is called a
Triple Zigzag. If not, it is called a Triple Sideways or Triple 3.

Rules:
  • Wave W cannot be a Triangle.
  • Wave X can be any correction except for an Expanding Triangle.
  • Wave X must be either larger or smaller than both waves W and X
  • Net direction of the complete pattern must be the same as the direction of wave W
  • Wave Y may be any corrective pattern except an Expanding Triangle.
  • Minimum X wave retracement is 23.6% of the previous wave by price distance.
  • Maximum length of the X wave is about 161% of previous wave by price distance.
  • Wave Y can be any corrective pattern except a Triangle.
  • Both X waves must be either less than 100% or more than 100% of W, Y and Z by price distance.
  • Net direction of the complete pattern is the same as direction of wave W by price.
  • The second X wave can be any corrective pattern except an Expanding Triangle
  • Wave Z can be any corrective pattern except an Expanding Triangle
Guidelines:
  • The X waves are usually a Zigzag or a Zigzag based pattern.

<

Flat


Wave Type: Corrective
Frequency of Occurrence: Common
FT - Pic

Rules:
  • Wave A can be any corrective pattern except a Triangle.
  • Wave B can be any corrective pattern
  • Wave B must retrace wave A more than 38.2% by price distance.
  • Wave B must be less than 261.8% of wave A by price distance. Internal wave points are also considered.
  • Wave C must be an impulsive pattern.
  • Wave C must share some common price territory with wave A.
  • The maximum length of wave C is 261.8% of the longest wave.
Guidelines:
  • Wave A is often a Zigzag or Zigzag based pattern.
  • The lengths of waves A, B and C are often either about equal or wave C is about 161.8% of wave A by price distance.
  • Wave B should retrace a minimum of 61.8% of wave A.
  • Wave B should be less than 161% of wave A.
  • Wave B is rarely a Flat.
  • Wave C is rarely a Diagonal Triangle Type 1.
  • Wave C should at least reach the end of wave A.
  • A Running Correction is very rare and is defined as: Wave B terminates well beyond the beginning of wave A, and wave C fails to travel to the end of wave A.
  • The length of wave C should be at least 38.2% of the length of wave A.



Triangle


Wave Type: Corrective
Frequency of Occurrence: Very Common
TR - Pic

Rules:
  • Each of the first 4 waves can be any corrective pattern except a Triangle. The fifth wave can be any corrective pattern including a Triangle.
  • Channel lines can be drawn across the ends of waves A and C, and across the ends of waves B and D. The pattern must move within these two channel lines, or if they move outside a channel line, it must be no more than 15% of the length of the wave in question.
  • The intersection of the two channel lines must be beyond the end of the Triangle.
  • The two lines must either converge or diverge. They cannot be parallel. A Triangle having converging channel lines is known as a Contracting Triangle. A Triangle having diverging channel lines is known as an Expanding Triangle.
  • The length of wave B must be between 38.2% and 261.8% of the length of wave A.
  • A Contracting Triangle can form wave E of a larger Contracting Triangle.
  • Contracting Triangle channel lines must move in opposite directions. Only one channel line may be horizontal.
  • Each wave of a Contracting Triangle must retrace a minimum of 50% of the previous wave.
  • Wave D is smaller than C, and E is smaller than wave D. Wave E is the smallest by price distance.
  • In an Expanding Triangle, either wave A or wave B will be the shortest by price distance.
  • In an Expanding Triangle, backward from wave E, three of the previous waves must be at least 50% of the wave to the right.
Guidelines:
  • Wave B is usually a Zigzag.
  • Expanding Triangles are rare.
  • Usually at least two waves travelling in the same direction will relate by about 61.8% (by price distance).
  • Expanding triangles usually have at least one of the following price distance relationships: Wave E is about 161% of wave C, Wave C is about 161% of wave A, or wave D is about 161% of wave B.
  • Waves A and B tend to alternate between sharp and sideways corrections.