What is Wave 2 in Elliott Wave?

Wave 2 is the corrective pullback that follows Wave 1 in an Elliott impulse. It typically retraces 50%–78.6% of Wave 1 (most commonly 61.8%). The absolute rule: Wave 2 cannot retrace more than 100% of Wave 1, or the count is invalidated.

Wave 2 is the first of two corrective waves inside a 5-wave impulse. It moves against the larger trend direction, partially retracing Wave 1's gains. Wave 2 most commonly retraces 50% to 78.6% of Wave 1, with the 61.8% Fibonacci level acting as the single most common terminal point. Wave 2 is often sharp (a zigzag) — when it is, Wave 4 tends to be sideways (the rule of alternation). The single absolute rule for Wave 2: it cannot retrace more than 100% of Wave 1. If price breaks the swing-low that started Wave 1, the impulse never started and the count is wrong. Wave 2 is also the most common entry point for trend-following Elliott Wave traders because the next move (Wave 3) is typically the strongest and longest wave in the impulse.

• → Elliott Wave Theory Guide — the 5-3 pattern, rules, Fibonacci, wave degrees
• → How to Count Elliott Waves — 6-step process used on 108 instruments
• → Elliott Wave Fibonacci Guide — the 7 core ratios and how they're applied
• → Rules and Guidelines — the 3 absolute rules + 7 guidelines

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Weekly wave counts on 108 US instruments

Every Monday Artavest publishes fresh wave counts with primary count, alternate count, and explicit invalidation levels.