medium · Elliott Wave Theory
In a bearish impulse (a trend move down), Wave 1 drops from $500 to 400. Wave 2 rallies to 460. Wave 3 drops to 250. Wave 4 rallies to $410.
Why does this violate the cardinal rules of Elliott Wave?
- Wave 4 enters the price territory of Wave 1.
- Wave 2 exceeded the origin of Wave 1.
- Wave 2 retraced more than 50% of Wave 1.
- Wave 3 is the shortest wave.
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