medium · Elliott Wave Theory
A bullish impulse shows wave 2 as a sharp 78% retracement of wave 1, and wave 4 as a shallow 23% sideways flat. An analyst worries the deep wave 2 breaks a rule.
Which statement most accurately resolves whether any RULE (not guideline) is violated?
- No rule is broken: wave 2 may retrace any amount short of 100% of wave 1, and the deep-versus-shallow contrast actually satisfies the guideline of alternation
- A rule is broken because wave 2 is hard-capped and may not ever retrace beyond 61.8% of wave 1 in any valid, rule-compliant impulse count
- No rule is technically broken, but the count is still invalid since alternation is treated as a hard rule forcing waves 2 and 4 to always differ in depth
- A rule is broken because wave 2 must always finish shallower in percentage terms than wave 4 does, in order to preserve the impulse's overall rightward price translation
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