easy · Elliott Wave Theory motive
An analyst observes a rally with the following price movements: Wave 1 rises 50 points, Wave 2 retraces 20 points, Wave 3 rises 40 points, Wave 4 retraces 10 points, and Wave 5 rises 45 points.
Why is this count invalid as a standard Elliott Wave impulse?
- Wave 2 failed to retrace at least half of Wave 1's length.
- Wave 4 retraced beyond the 23.6% Fibonacci ratio of Wave 3.
- Wave 5, at 45 points, exceeds the length traveled by Wave 3.
- Wave 3 is the shortest impulse wave among Waves 1, 3, and 5.
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