hard · Elliott Wave Theory motive
A technician observes an impulse rally: Wave 1 ends at 120 from an origin of 100. Wave 2 retraces to 108. Wave 3 is a powerful move to 180. Wave 4 then pulls back to a low of 118 before price rallies again.
Is this a valid Elliott Wave impulse?
- Yes, provided the closing price of Wave 4 stayed above the 120 level throughout.
- No, because Wave 2 retraced more than the maximum allowed 61.8% of Wave 1.
- No, because Wave 4 has violated Rule 3 by overlapping the price territory of Wave 1.
- Yes, because Wave 3 is the longest wave among the three impulse legs, satisfying Rule 2.
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