Truncation
Truncation in Elliott Wave Theory: When Wave 5 fails to exceed the end of Wave 3. Truncations occur after an extremely powerful Wave 3. The Wave 5 subdivides into five waves but falls short of making a new high (or low). This signals exceptional weakness.
What Truncation Means
When Wave 5 fails to exceed the end of Wave 3. Truncations occur after an extremely powerful Wave 3. The Wave 5 subdivides into five waves but falls short of making a new high (or low). This signals exceptional weakness.
After a massive Wave 3 rally of $50, Wave 5 only manages $2 beyond Wave 3, barely making a new high before a major reversal.
Where You'll See It
Truncation appears regularly in Artavest's weekly wave-count analysis across 108 US stocks and ETFs. It's part of the impulse family of Elliott Wave concepts and shows up most often when analysts are labelling the 5-wave impulse structure that drives the larger trend.
- → Elliott Wave Theory Guide — the 5-3 pattern, rules, Fibonacci, wave degrees
- → Elliott Wave Cheat Sheet — the 3 absolute rules and 6 Fibonacci relationships
- → Our Methodology — how Artavest analysts count waves on 108 US instruments