medium · Elliott Wave Theory alternation
In a 24-hour currency market, an analyst observes a wedge-shaped Wave 1 that contains 5-wave impulses in its internal sub-waves 1, 3, and 5. Wave 4 overlaps Wave 1.
What is the expected structure of the ensuing Wave 2?
- A shallow 23.6% pullback, since the leading diagonal already shows strong early momentum here
- A 3-wave flat correction that fails to fully retrace back up to the Wave 1 high before Wave 3 starts
- A deep retracement, often 61.8% to 78.6%, because leading diagonals signal a slow start to a trend
- A triangle thrust pattern that simply continues sideways along the wedge's original slope, signaling continuation
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