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Before making your own decision regarding the merits of Elliott Wave Theory, it is strongly recommended that you take the time to further explore writings and research that cover this particular analytical tool. Wave 5 advance is caused by a small group of traders.Although the prices make a new high above the top of wave 3, the rate of power or strength inside wave 5 advance is very small when compared to wave 3 advance, Wave A: Corrections are typically harder to identify than impulse moves. Given the significant degree of interpretation and subjective measure involved in this theory, you will benefit immensely from practicing your predictive skills before entering the market place. 6. level 1. marketmaker_fx. At this point, anticipating a reversal, the trader may then go short on the stock. Wave 2 cant retrace more than the beginning of wave 1, Wave 3 can not be the shortest wave of the three impulse waves, namely wave 1, 3, and 5, Wave 4 does not overlap with the price territory of wave 1, Wave 5 needs to end with momentum divergence, Wave 2 is 50%, 61.8%, 76.4%, or 85.4% of wave 1, Wave 3 is 161.8%, 200%, 261.8%, or 323.6% of wave 1-2, Wave 4 is 14.6%, 23.6%, or 38.2% of wave 3, There are three different ways to measure wave 5. Leonardo Fibonacci da Pisa is a thirteenth century mathematician who discovered the Fibonacci sequence. Get Started Now In this study we apply the Elliott's Wave theory to the index S&P 500 for a period of three years, starting from the October 2008 and until December 31, 2011. Dont believe the hype of 84.9% accuracy. This theory attempts to break down the fluctuations of the financial markets into a series of repetitive patterns, formed by a succession of "waves". There are three different types of Flats: Regular, Irregular / Expanded, and Running Flats. Below is the list of important Fibonacci Retracement and Fibonacci Extension ratios for the financial market: Fibonacci Ratio is useful to measure the target of a waves move within an Elliott Wave structure. In Figure 2, the impulse move is subdivided as 1, 2, 3, 4, 5in minor degree. All these waves move in the primary trend direction, but Wave 2 and Wave 4 move in the opposite direction. Professional accountant Ralph Nelson Elliott fired the opening shot in a decades-long debate when he releasedThe Wave Principle in 1938. Wave C is typically at least as large as wave A and often extends to 1.618 times wave A or beyond. Follow the link below to tap into those insights now. For example, a corrective wave may have a retrace of 38% of the preceding impulse. An impulse wave pattern describes a strong move in the price of a financial asset that coincides with the main direction of the underlying trend. Why wait till then? The previous trend is considered still strongly in force. The ability to reinforce or challenge predictions supported by Elliott Wave Theory with other data-driven tools will help investors make informed and confident decisions with regard to their investments. These returns cover a period from 1986-2011 and were examined and attested by Baker Tilly, an independent accounting firm. Ryan Cockerham is a nationally recognized author specializing in all things business and finance. Essentially, there would always be 5 wave motions in the same direction as current trends, followed by 3 corrective waves moving against the main trend. We assume all data to be accurate, but assume no responsibility for errors, omissions or clerical errors made by sources. Copyright 2023 Zacks Investment Research. Both beginners and long time traders love it. The bean shortage bombshell hadn't dropped yet. Different waves in an Elliott Wave structure relates to one another with Fibonacci Ratio. Unlock tons of free reports, videos, forecasts and more designed for investors like you. Trend Following on iTunes investing with 8M+ listens and 800+ episodes. In technical analysis, the Elliott Wave theory is the analysis of long-term trends in price patterns and how they correspond with investor psychology. The volume during wave B should be lower than in wave A. Third, wave 5 is 61.8% of wave 1-3, Impulses usually have an extension in one of the motive waves (either wave 1, 3, or 5), Extensions are elongated impulses with exaggerated subdivisions, Extensions frequently occur in the third wave in the stock market and forex market. The information on this website is intended as a sharing of knowledge and information from the research and experience of Michael Covel and his community. FFS covers the stock indexes, bonds, gold, silver, the U.S. dollar, as well as market psychology and cultural trends. 2. In Elliott Wave Theory, the traditional definition of motive wave is a 5 wave move in the same direction as the trend of one larger degree. The Golden Ratio (1.618) is derived by dividing a Fibonacci number with another previous Fibonacci number in the series. In fact, we can apply three easily understood wave principles to a popular breakout strategy right now and watch how they improve market timing and profit production. They are illustrated in the graphic below. Volume picks up, and by the third leg of wave C, almost everyone realizes that a bear market is firmly entrenched. We instead prefer to call it motive sequence.We define a motive sequence simply as an incomplete sequence of waves (swings). There are three different variations of a 5 wave move which is considered a motive wave: Impulse wave, Impulse with extension, and diagonal. The first five waves form the impulsive move, moving in the direction of the main trend. Looks like something that only ever has value in hindsight and that's in the rare occurrences that it actually applies. Qualitative Analytics. He found that swings in mass psychology always showed up in the same recurring fractal patterns, or "waves," in financial markets. I attempted to understand Elliott wave but it was way too fucking complicated. Thus, for every impulsive move, there will be a corrective one. Triangles have 5 sides and each side is subdivided in 3 waves hence forming 3-3-3-3-3 structure. Typically, the news is still bad. In 1987, Robert Prechter an expert in Elliot's wave theory noticed a series of market parameters which, according to his own understanding of wave theory and the recent history of the marketplace, signaled the beginning of a significant decline in market value. However, we think that motive waves do not have to be in 5 waves. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem. When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. Fibonacci is most famous for his Fibonacci Summation series which enabled the Old World in the 13th century to switch from Roman numbering (XXIV = 24) to the Arabic numbering (24) that we use today. This information (about smaller patterns fitting into bigger patterns), coupled with the Fibonacci relationships between the waves, offers the trader a level of anticipation and/or prediction when searching for and identifying trading opportunities with solid reward/risk ratios. The Dow Theory states that the market is trending upward if one of its averages advances and is accompanied by a similar advance in the other average. As with any investment strategy, it is always important to remember there are no guarantees in the marketplace. His work has served the business, nonprofit and political community. Give it a try and share your excitement with us! The third leg of the impulse wave will never be the shortest of legs 1, 3 or 5. Comprises the monthly Elliott Wave Financial Forecast, 3x-per-week Short Term Update and at least 12x-per-year Elliott Wave Theorist. Watch our Trader's Classroom editor Robert Kelley walk you through recent triangle wave patterns in AAPL and TSLA and show how to put them to use in real time. An analytical forecast for the first half of 2012 has been carried out. Why? Investopedia does not include all offers available in the marketplace. In simple words. In Figure 4B, the leading diagonal is a subdivision of wave A in a zigzag, Leading diagonal is usually characterized by overlapping wave 1 and 4 and also by the wedge shape but overlap between wave 1 and 4 is not a condition, it may or may not happen, The subdivision of a leading diagonal can be 5-3-5-3-5 or 3-3-3-3-3. The trader would need to re-label the suspected impulse wave. Three main rules for impulse waves in Elliott Wave theory. Impulse Waves: These consist of five waves, generally named Wave 1, Wave 2, Wave 3, Wave 4, and Wave 5. FFS covers the stock indexes, bonds, gold, silver, the U.S. dollar, as well as market psychology and cultural trends. Now that the types of waves involved in the theory have been discussed, it is possible to explore how they interact with one another during market action. Revised and extended with twice as much content. What Is Volume of a Stock, and Why Does It Matter to Investors? All month long, Financial Forecast Service helps you stay ahead of the waves in the U.S. markets on the timeframes that matter the most. Fibonacci Retracement in technical analysis and in Elliott Wave Theory refers to a market correction (counter trend) which is expected to end at the areas of support or resistance denoted by key Fibonacci levels. The news is almost universally positive and everyone is bullish. Textbook Elliott wave patterns and real-life price patterns sometimes don't look quite the same. Take a read: Just think how your trading profits would improve if what we say is true. Here, they may go long on the stock until it completes its fifth wave. As you can see from the patterns pictured above, five waves do not always travel net upward, and three waves do not always travel net downward. Because Elliott additionally recognized the "fractal" nature of markets, however, he was able to break down and analyze them in much greater detail. How Do You Trade Using Elliott Wave Theory? Thats fine. Below are examples of different combinations of three corrective structures which form the triple threes: Above figure is a combination of a flat, double three, and zigzag, Above figure is a combination of three double threes, New Elliott Wave, Correlation & Trading Execution, Trading Right Side using Elliott Wave Theory, Cycles and Sequences, Elliottwave, Market Dynamic and Correlations, Complete Beginners Guide to Forex Trading. There are 5 waves in each trend, and by recognizing where the market . Traders may have differing interpretations of a market's Elliott Wave structure at a given time. Yet, no data show otherwise. "Introduction to the Wave Principle." Junk mail brought in a real gem regarding Elliott Wave. The various financial trading . What Is a Pennant Chart Pattern in Technical Analysis? The three wave correction is labelled as a, b, and c. These patterns can be seen in long term as well as short term charts. Corrective waves start with a five-wave counter-trend impulse (wave A), a retrace (wave B), and another impulse (wave C). Double three is a sideways combination of two corrective patterns. Elliott proposed that financial pricetrends result from investors'predominant psychology. Trend analysis is a technique used in technical analysis that attempts to predict future stock price movements based on recently observed trend data. It sheds light on the natural rhythm of the psychology of the masses in the trading market that manifests itself in the form of waves. Unfortunately, this is when many average investors finally buy in, right before the top. There should be three corrective waves that occur during this time. Elliott Wave Theory provides analysts with the tools they need to identify market trends and leverage this knowledge as part of smart investing. Check out my 2017 epic release: Trend Following: How to Make a Fortune in Bull, Bear and Black Swan Markets. When I was doing work experience in London I heard about a client who went bankrupt following Elliot Wave when the market turned in 2009. Elliott believes that market activity always followed a clear "5-3" pattern. The subsequent three waves provide the corrective waves. By this point, fundamentals are probably no longer improving, but they most likely have not yet turned negative, Wave C: Prices move impulsively lower in five waves. The Elliott Wave refers to a theory (or principle) that investors and traders may adopt in technical analysis. And cocoa bulls cheered as prices soared to 1-year highs. The Elliott Wave theory is a form of technical analysis that looks for recurrent long-term price patterns related to persistent changes in investor sentiment and psychology. Think of all the money you could be making before the masses catch on to this legendary forecasting tool. However, as we have explained above, both trend and counter-trend can unfold in corrective pattern in todays market, especially in forex market. )PRICE ACTION COURS. The Fed merely follows. Beginning the next Monday, the market experienced what is now referred to as "Black Monday," a 23 percent drop in market value that spearheaded a total drop of 34 percent over a span of two weeks. The underlying 5-3 pattern remains constant, though the time span of each wave may vary. You can find the same principle at work in the United Kingdom, Australia and other global central banks. This description does not mean to imply that there will be no small reversals during the impulse wave. Daily Reliable Forecasts of 78 Instruments, Stocks, ETFs, Indices, Forex, Commodities & Cryptocurrencies, Live Chat Rooms - Analysis Sessions - Trading Rooms, Hourly Counts - Live Analysis Session - Live Trading Rooms, Elliott Wave Theory: Modern Theory for 21st Century Market, Basic Principle of the 1930s Elliott Wave Theory, Five Waves Pattern (Motive and Corrective), The Rise of Algorithmic / Computer-Based Trading, Relation between Fibonacci and Elliott Wave, Fibonacci Retracement, Extension & Trading Strategies, Wave 2 is typically 50%, 61.8%, 76.4%, or 85.4% of wave 1, Wave 4 is typically 14.6%, 23.6%, or 38.2% of wave 3, Wave 5 is typically inverse 1.236 1.618% of wave 4, equal to wave 1 or 61.8% of wave 1+3, Impulse wave subdivide into 5 waves. Some of the key Fibonacci ratios can be derived as follow: 0.618 is derived by dividing any Fibonacci number in the sequence by another Fibonacci number that immediately follows it. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. As a journalist, he has extensively covered business and tech news in the U.S. and Asia. These waves typically have the following structure: Note that in this picture, waves A and C move in the direction of the trendat one-larger degree and, therefore, are impulsive and composed of five waves. On a fundamental level, Elliott defined two primary forms of waves that influence market behavior: impulse waves and corrective waves. An impulse wave can be defined as a significant swing in the price of an asset which largely coincides with more broad trend lines of the asset or market. A. For example, a one-year chart may be in the midst of a corrective wave, but a 30-day chart may show a developing impulse wave. Here's a historical snapshot from Robert Prechter's book, The Socionomic Theory of Finance: The chart plots monthly data for the interest rate of the freely-traded, 3-month euro generic government bond versus the European Central Bank's (ECB's) main refinancing operations rate, which is Europe's equivalent to the U.S. federal funds rate. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Depending on the number of stops, gaps are left open. You may have never heard of Elliott Wave Theory before. Second rule: Wave 3 cannot be the shortest among waves 1, 3 and 5. McDonald's (MCD) Buying Interest Surges to 5-Month High, Starbucks (SBUX) Gaining Ground Despite Horrendous Quarter, How To Trade Breakouts Using Elliott Wave Theory, Tesla (TSLA) Priced for Perfection Ahead of Earnings. For example, an analyst may predict a market downturn when, in fact, the market climbed significantly. : Review trend following systems and training: Select TraderRichard DennisJerry ParkerTom ShanksJames DiMariaPaul RabarHoward SeidlerCurtis FaithLouis BaconTom BaldwinPeter BorishLeon CoopermanRichard DriehausDruckenmillerKenneth GriffinBlair HullPaul Tudor JonesMark KingdonBruce KovnerMichael MarcusMark RitchieJim RogersMarty SchwartzJim SimonsGeorge SorosVictor SperandeoMichael SteinhardtTiger CubsMonroe TroutMillburnKen TropinKeith CampbellSalem AbrahamDonchian ProtegesDavid DruzMount LucasMulvaney CapitalSuperfundTransTrendTucson AssetDrury CapitalEclipse CapitalMan InvestmentsSunrise CapitalWinton CapitalRichard DonchianEd SeykotaJesse LivermoreJohn W. HenryCharles Faulkner. Elliott wave theory was discovered in 1930s by Ralph Nelson Elliott and has survived the test of time. This next pattern repeats itself ad infinitum at ever-smaller scales. Just imagine: You are sitting in front of your computer testing the results of the Elliott Wave Analyzer 3. Five waves move in the direction of the main trend, followed by three. Motive waves move in the same direction of the primary trend, but in todays time, we believe it doesnt necessarily have to be in impulse. Statistical mechanics and viscoelastic theory were used to elucidate it by . He was an American accountant and author. A triangle is a sideways movement that is associated with decreasing volume and volatility. With this information in hand, we can buy the instrument within the 4thwave, in anticipation of the breakout. Elliott's Masterworks, which was published in 1994. Central to Elliott's theory is the concept that there is a deeply embedded set of behavioral patterns in all waves. Underlying this trading theory is the idea that fractal patterns recur in financial markets. Although Elliott's theory clearly establishes a means of analyzing and defining action within the market, those who use the theory on a regular basis agree that the fractal nature of the theory and its observable nature in the marketplace do not necessarily mean that the market should be considered predictable. When rising price prints a big gap and keeps on moving, doubling the length of the wave prior to its appearance, its called a continuation gap, as defined by Edwards and Magee in the 1948 bookTechnical Analysis of Stock Trends. Anyone looking to get in on a pullback will likely miss the boat. In fact, each of the five elements of the impulse moving in the direction of market trend will often be followed by a very short price reversal. Whereas Zigzag is a 5-3-5 structure, Flat is a 3-3-5 structure. Three EWT principles helped us predict what happened next because the buying spike into resistance showed the outline of waves 1 through 4 of an Elliott 5-wave rally set. Ralph Elliott. Corrective waves, which are sometimes called diagonal waves, consist of threeor a combination of threesub-waves that make net movement in the direction opposite to the trend of the next-largest degree. The 3 waves A, B, and C make up a larger degree corrective wave (2), In a bear market the dominant trend is downward, so the pattern is reversedfive waves down and three up. Ralph Nelson Elliott adapted the bubble cycle (boom and bust) into a tradeable concept. For example, in impulse wave: Traders can thus use the information above to determine the point of entry and profit target when entering into a trade. Specifically, they were designed to identify and predict wave patterns within stock markets. The theory identifies impulse waves that set up a pattern and corrective waves that oppose the larger trend. Corrective waves are a set of price movements normally associated with the Elliott Wave Theory of technical analysis. Here we will finally conclude with learning about the "Fibonacci Ratio Lengths for Corrective Wave Multiples". Elliott Wave degree is an Elliott Wave language to identify cycles so that analyst can identify position of a wave within overall progress of the market. First, wave 5 is inverse 123.6 161.8% retracement of wave 4. Elliott Wave Theory provides analysts with the tools they need to identify market trends and leverage this knowledge as part of smart investing. The timeframe is left to your taste; and it emphasizes having a Plan, which I endorse. It is as easy as that. We have four major classes of market: Stock market, forex, commodities, and bonds. In 1242, he published a paper entitled Liber Abacci which introduced the decimal system. This is a complex tool within technical analysis, which can be difficult to understand initially, but once you start applying it you would be amazed with the insights for financial trading offered by this theory. At the end of wave 4, more buying sets in and prices start to rally again. Michael Logan is an experienced writer, producer, and editorial leader. Well look for specific Elliott Wave criteria after a major low appears and a financial instrument tests a key breakout level. The Elliott Wave theory was developed by Ralph Nelson Elliott in the 1930s. The Elliott Wave Theory is a form of technical analysis that looks for recurrent long-term price patterns related to persistent changes in investor sentiment and psychology. Elliott based part his work on the Dow Theory, which also defines price movement in terms of waves, but Elliott discovered the fractal nature of market action. Purchase the Elliott Wave Analyzer 3 NOW and start using the power of 84.9% accuracy in your trading today. This article will also add a few Elliott Wave theory examples of guidelines: 1) waves often alternate SOI f a wave 2 retracement is deep, then wave 4 is often shallow, 2) waves 2 are often simple corrections while waves 4 are often complex corrections, 3) wave 3 almost always has the greatest volume, 4) if wave 1 is a leading diagonal, wave 3 . Sentiment surveys are decidedly bearish, put options are in vogue, and implied volatility in the options market is high. Elliott was able to analyze markets in greater depth, identifying the specific characteristics of wave patterns and making detailed market predictions based on the patterns. This particular event, no doubt one of the most historic events in the history of the modern financial markets, cemented the credibility of Elliott Wave theory and Prechter himself for the foreseeable future. The pattern usually forms at the end of a downtrend but can also occur as a consolidation in an uptrend. What Fueled Cocoa's Recent Surge? The news is now positive and fundamental analysts start to raise earnings estimates. Learn how it works with an example, how to identify a target. Triangle Chart Pattern in Technical Analysis Explained. Impulses are always subdivided into a set of 5 lower-degree waves, alternating again between motive and corrective character, so that waves 1, 3, and 5 are impulses, and waves 2 and 4 are smaller retraces of waves 1 and 3. In other words, the market can trend in a corrective structure; it keeps moving in the sequence of 3 waves, getting a pullback, then continue the same direction again in a 3 waves corrective move. His theory of pattern recognition argues that market trends unfold in five waves when traveling in the direction of aprimaryimpulse and 3 waves when opposing that impulse. Below are the 5 main types of Elliott Wave Patterns: 1. The theory identifies impulse waves that set up a pattern and corrective waves that oppose the larger trend. Wave B, in contrast, is counter-trend and therefore corrective and composed of three waves. Luckily, we dont need to join a secret society or spend a decade memorizing a thousand rules and exceptions to take advantage of EWTs great power. Elliott Wave Theory holds that each wave within a wave count contains a complete 5-3 wave count of a smaller cycle. Legitimate questions arise whether Elliott Wave Principle can be applied in todays new trading environment. We also reference original research from other reputable publishers where appropriate. We'll test this thesis by applying the first two of our three principles. It is our most popular service. On Feb. 15, Ivory Coast exporters reported a massive supply deficit. The theory gained notoriety in 1935 when Elliott made an uncanny prediction of a stock market bottom. This hypothesis says that stock price movements can be predicted because they move in repeating up-and-down patterns called waves that are created by investor psychology or sentiment. The subdivision in this case is ((i)), ((ii)), ((iii)), ((iv)), and ((v)) in minute degree. Elliott described specific rules governing how to identify, predict, and capitalize on these wave patterns. Introduction to Elliott Wave Theory is based on the idea that the financial markets form the same types of patterns in the smaller timeframe that they do in the longer timeframe. We are convinced that you will be addicted to the Elliott Wave Analyzer once you have tasted the success of trading with 84.9% accuracy. Commodities market commonly develop extensions in the fifth wave, Special type of motive wave which appears as subdivision of wave 1 in an impulse or subdivision of wave A in a zigzag, In Figure 4A, the leading diagonal is a subdivision of wave 1 in an impulse. Third rule: Waves 1 and 4 must not overlap. The Elliott Wave Theory is one of the most effective technical analysis tools. It is our most popular service. This is labeled as a 5-3-5-3-5 structure, which was shown above. Most analysts see the drop as a correction in a still-active bull market. Fractals are mathematical structures, which on an ever-smaller scale infinitely repeat themselves. In Figure 1, wave 1, 3 and 5 are motive waves and they are subdivided into 5 smaller degree impulses labelled as ((i)), ((ii)), ((iii)), ((iv)), and ((v)). Bollinger Bands: What They Are, and What They Tell Investors, MACD Indicator Explained, with Formula, Examples, and Limitations, Relative Strength Index (RSI) Indicator Explained With Formula, Stochastic Oscillator: What It Is, How It Works, How To Calculate, Price Rate of Change (ROC) Indicator: Definition and Formula, Money Flow Index - MFI Definition and Uses. Wavetwocannot retrace more than 100%of the first wave, The third wavecan never be the shortest of waves one, three,and five, Wave four can't go beyond the third wave at any time. | Sitemap | RSS | Privacy Policy, Translations: Deutsche | Franais | | | | P | | Italiano | Nederlands | Portugus | Espaol, The Only Trend Following Documentary Film: Watch | Larry Hite's The Rule: Read, Trend Following Portal: 1000+ Podcast Episodes. Essentially, one should be able to "zoom in" on a larger wave and discover the same recurring patterns of impulse waves and corrective waves, albeit it on a smaller scale. Other trademarks and service marks appearing on the Trend Following network of sites may be owned by Trend Following or by other parties including third parties not affiliated with Trend Following. Elliott uncovered this fractal structure in financial markets in the 1930s, but only decades later would scientists recognize fractals and demonstrate them mathematically. A Lack of Beans OR Bullish "Triangle"? Since 1986 it has nearly tripled the S&P 500 with an average gain of +26% per year. The oscillator provides a computerized method of predicting future price direction based on the difference between a five-period and 34-period moving average. Image by Sabrina Jiang Investopedia2020, Elliott Wave Theory: How to Understand and Apply It, Cup and Handle Pattern: How to Trade and Target with an Example, Dow Theory Explained: What It Is and How It Works, Descending Triangle: What It Is, What It Indicates, Examples. Various Fibonacci ratios can be created in a table shown below where a Fibonacci number (numerator) is divided by another Fibonacci number (denominator). Finally, it explains a fractal market in which each wave churns out similar patterns within progressively lower and higher time frames. What a powerfull tool and it could be yours. Only motive waves are fives. We also reference original research from other reputable publishers where appropriate. They are easily seen in nature (seashell spirals, flower petals, structure of tree branches, etc), art, geometry, architecture, and music. You can capitalize on these discoveries immediately. NYSE and AMEX data is at least 20 minutes delayed. Motive Sequence: 5, 9, 13, 17, 21, 25, 29, , Wave 1: In Elliott Wave Theory, wave one is rarely obvious at its inception. This is not the first time. Visit performance for information about the performance numbers displayed above. If one knows how the wave pattern looks like and at what stage it is right now, he could be . The longest wave count is called the Grand Supercycle. Elliott discovered stock index price patterns were structured in the same way. It is our most popular service. Gaps are a good indication of a Wave 3 in progress. The stock jumped back to resistance at the summer high in early November, carving out two rally waves and stalling out into mid-month. Use your interpretations of market activity as part of Elliott Wave Theory to make your picks. The Elliott Wave theory is a theory in technical analysis used to describe price movements in the financial market. Wave 2 and 4 are corrective waves and they are subdivided into 3 smaller degree waves labelled as ((a)), ((b)), and ((c)). Thus, one way to label between ABC and impulse is whether the third swing has extension or not, A corrective 3 waves move labelled as ABC, Subdivision of wave A and B is in 3 waves, Subdivision of wave C is in 5 waves impulse / diagonal, Subdivision of wave A and B can be in any corrective 3 waves structure including zigzag, flat, double three, triple three, Wave B terminates near the start of wave A, Wave C generally terminates slightly beyond the end of wave A, Wave C needs to have momentum divergence, Wave C = 61.8%, 100%, or 123.6% of wave AB, Wave B of the 3-3-5 pattern terminates beyond the starting level of wave A, Wave C ends substantially beyond the ending level of wave A, Wave B of the 3-3-5 pattern terminates substantially beyond the starting level of wave A as in an expanded flat, Wave C fails travel the full distance, falling short of the level where wave A ended, RSI also needs to support the triangle in every time frame, Subdivision of ABCDE can be either abc, wxy, or flat, A combination of two corrective structures labelled as WXY, Wave W and wave Y subdivision can be zigzag, flat, double three of smaller degree, or triple three of smaller degree, Wave X = 50%, 61.8%, 76.4%, or 85.4% of wave W, Wave Y = 61.8%, 100%, or 123.6% of wave W, A combination of three corrective structures labelled as WXYXZ, Wave W, wave Y, and wave Z subdivision can be zigzag, flat, double three of smaller degree, or triple three of smaller degree, Wave Z = 61.8%, 100%, or 123.6% of wave W, Wave Y can not pass 161.8% of wave W or it can become an impulsive wave 3.