Elliott Wave Cheat Sheet
All rules, wave personalities, patterns, Fibonacci relationships, and trading reference points in one page. Bookmark or print for quick access during analysis.
The 5-3 Pattern
Impulse Phase (5 Waves)
Corrective Phase (3 Waves)
Together, the 5-wave impulse and 3-wave correction form one complete 8-wave cycle. This cycle repeats at every degree of trend, from multi-century Grand Supercycles down to minute-by-minute Subminuette patterns.
Three Cardinal Rules
These rules are absolute and can never be broken. If any rule is violated, the wave count is invalid and must be revised.
Wave 2 never retraces beyond the start of Wave 1
If price moves below the origin of Wave 1 in a bull market (or above it in a bear market), the count is invalid. This is the most fundamental rule for confirming a new impulse.
Wave 3 is never the shortest impulse wave
Among waves 1, 3, and 5, Wave 3 cannot be the shortest by price distance. It does not need to be the longest, but it must exceed at least one of the other two in length.
Wave 4 does not overlap Wave 1 price territory (except in diagonals)
In a standard impulse, the low of Wave 4 must stay above the high of Wave 1. If it enters Wave 1 territory, the structure is either a diagonal or the count is wrong.
Wave Personality
Each wave has a distinct character shaped by investor psychology. Understanding these personalities helps identify which wave is currently unfolding.
Wave 1: The Foundation
- Often mistaken for a corrective rally or bear market bounce
- Typically the shortest impulse wave
- Volume may start low and gradually increase
- Fundamental news is usually still negative
- Marks the beginning of a new trend direction
Wave 2: The Retest
- Deep retracement, often 50% to 61.8% of Wave 1
- Fear returns as investors doubt the new trend
- Volume declines as fewer participants sell
- Never retraces beyond the start of Wave 1
- Often unfolds as a sharp zigzag pattern
Wave 3: The Powerhouse
- Strongest and usually the longest impulse wave
- Highest trading volume and widest price bars
- Fundamental news turns positive and confirms the trend
- Commonly extends to 161.8% or 261.8% of Wave 1
- Professional traders focus on catching this wave
Wave 4: The Consolidation
- Shallow retracement, typically 23.6% to 38.2% of Wave 3
- Choppy, sideways, and often complex in structure
- Volume drops significantly as momentum fades
- Alternates in form with Wave 2 (sharp vs. flat)
- Cannot overlap Wave 1 price territory in an impulse
Wave 5: The Final Push
- Final move in the trend direction before correction
- Declining momentum, lower volume than Wave 3
- Momentum divergence on RSI and MACD is common
- May truncate (fail to exceed Wave 3 high) after strong Wave 3
- Often accompanied by extreme bullish or bearish sentiment
Corrective Patterns
Corrections move against the larger trend. Identifying the correct corrective pattern early helps you anticipate its depth, duration, and when it will complete.
Zigzag
A sharp correction where Wave A subdivides into five waves, Wave B into three, and Wave C into five. The steepest corrective pattern. Wave B typically retraces 38.2% to 61.8% of Wave A. Common in Wave 2 position.
Flat
A sideways correction where Wave A is three waves, Wave B retraces most or all of Wave A, and Wave C is five waves. Three variants: regular (B near A start), expanded (B beyond A start, C beyond A end), and running (B beyond A start, C short of A end).
Triangle
A five-wave sideways pattern with converging trendlines. Each wave subdivides into three. Appears only in Wave 4 or Wave B position. The breakout from Wave E launches the final wave of the larger pattern.
Double Zigzag
Two zigzags connected by a Wave X. Produces a deeper correction than a single zigzag. Used when the first zigzag does not achieve sufficient retracement depth.
Double Three
Two simple corrective patterns (zigzag, flat, or triangle) connected by a Wave X. The components can be any combination. A triangle can only appear as the final pattern (Y).
Triple Three
Three simple corrective patterns connected by two X waves. The most complex correction. A triangle can only appear as the final pattern (Z). Rare in practice.
Fibonacci Relationships
Fibonacci ratios provide the mathematical framework for projecting where waves will start and end. These are guidelines, not absolute rules, but they hold with remarkable consistency.
Wave Degree Table
Elliott identified nine degrees of wave patterns, from multi-century Grand Supercycles down to Subminuette patterns lasting minutes. Each wave at one degree subdivides into waves of the next smaller degree.
Quick Reference: When to Act
Use these reference points to align your trading decisions with the wave structure. Always confirm with your own analysis before acting.
Enter at 50%-61.8% retracement of Wave 1. Stop below Wave 1 start. Target: 161.8% extension of Wave 1.
Enter at 23.6%-38.2% retracement of Wave 3. Stop below Wave 1 high. Target: Wave 5 projection (100% of Wave 1 from Wave 4 low).
Watch for 161.8% extension of Wave 1. Reduce position size. Trail stop below Wave 4 support once it forms.
Watch for momentum divergence (RSI, MACD). Price near channel top. Volume declining. Exit fully at target.
Do not trade choppy Wave 4 corrections. Wait for clear Wave 4 completion and Wave 5 breakout or short setup after Wave 5.
If the pattern is unclear or the count is ambiguous, stay out. Clarity will come. The market always offers another setup.
Always start counting from the weekly timeframe and work down to daily, then 4-hour.
If your count violates an absolute rule, discard it immediately. Do not force a count.
Wave 3 is your friend. It has the strongest momentum, widest range, and highest volume.
Use Fibonacci confluence zones where multiple levels from different waves overlap.
Track every analysis on a scorecard. If your hit rate drops below 50%, review your methodology.
When in doubt, stand aside. The market will always present another opportunity.
Maintain at least two alternate wave counts. If your primary count fails, the alternate becomes your new primary.
Look for momentum divergence on RSI or MACD between Wave 3 and Wave 5 to confirm Wave 5 completion.
This cheat sheet is for educational purposes only and does not constitute investment advice. Elliott Wave analysis involves subjective interpretation and inherent uncertainty. Always conduct your own research and consult a qualified financial advisor before making investment decisions. Past performance does not guarantee future results.
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