How do you identify an impulse wave?
Identifying an impulse wave is crucial for traders and investors who use Elliott Wave Theory, as impulse waves are the primary building blocks of trends. Here’s a detailed guide on how to identify an impulse wave: Characteristics of an Impulse Wave An impulse wave is composed of five distinct sub-waves that move in the direction of the main trend. These sub-waves are labeled as 1, 2, 3, 4, and 5. Here are the key characteristics: 1. Wave 1: The initial move in the direction of the trend. 2. Wave 2: A corrective wave that retraces a portion of Wave 1. 3. Wave 3: Typically the strongest and longest wave, extending beyond the end of Wave 1. 4. Wave 4: Another corrective wave, usually less severe than Wave 2. 5. Wave 5: The final move in the direction of the trend, often showing diminishing momentum compared to Wave 3. Rules of Impulse Waves To correctly identify an impulse wave, certain rules must be adhered to: 1. Wave 2 cannot retrace more than 100% of Wave 1. This means Wa...