Working Money: Recognizing Elliott Wave Patterns by Rudy Teseo
Part I discussed the basic wave
patterns: impulse and corrective. Part
II will describe the patterns that must
be recognized in order to do a thorough
job of Elliott wave (EW) analysis.
The following examples by no means
include all the patterns you will
encounter in your Elliott wave
analysis, but represent those that
appear most often. You need to know
not only to what price levels the market
will rise, but also what patterns to
expect in your bar (candle) chart.
The two main Elliott waves are
motive and corrective. The motive
wave is a five-wave configuration with
waves 1, 3, and 5 in the direction of the
trend. In a bull market you will expect each wave to be higher
than the preceding one. Think of these as higher highs. In a bear
market these waves will be descending; think of them as lower
lows. The corrective waves, 2 and 4, will move in the opposite
direction to the major trend.