What is Wave 4 in Elliott Wave?

Wave 4 is the corrective consolidation that follows Wave 3 in an Elliott impulse. It typically retraces 38.2% of Wave 3 and often forms as a sideways triangle or flat. The absolute rule: Wave 4 cannot enter Wave 1 price territory (except in diagonals).

Wave 4 is the second corrective wave inside a 5-wave impulse. It pulls back against the trend after the explosive Wave 3 is complete. Wave 4 retracements are typically shallower than Wave 2 — most commonly 38.2% of Wave 3, sometimes 23.6%. By the rule of alternation, if Wave 2 was a sharp zigzag, Wave 4 tends to be a sideways flat or triangle, and vice versa. The absolute rule: Wave 4 cannot enter the price territory covered by Wave 1. In an uptrend, Wave 4's low cannot dip below Wave 1's high. The only exception is inside a diagonal pattern (leading or ending diagonal), where overlap is allowed by definition. Wave 4 is often the most patience-testing wave because it can drag on as a triangle for weeks, but it sets up the final Wave 5 push and is a low-risk entry point for traders waiting for the impulse to resume.

• → 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

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