The "Elliott Wave Theory" is well explained, but very few truly understand how to use it.
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The Elliott Wave has the following 3 principles.
◐ Principle ①: The duration of the 3rd wave in a motive wave cannot be the shortest among waves 1, 3, and 5.
◐ Principle ②: The 2nd wave in a motive wave cannot exceed the starting point of wave 1 during correction.
◐ Principle ③: The bottom of the 4th wave in a motive wave cannot be lower than the high point of wave 1.
After meeting the above principles, the Elliott Wave Theory will be established, making it easier to predict future corrections. However, even if the above principles are met, the movement may not necessarily fluctuate according to the Elliott Wave rules, and additional caution is required.
The basic form of the Elliott Wave is "5 waves of motive and 3 waves of correction," thus forming a complete "8 wave cycle." The purpose of the motive waves is to drive the main trend of the market price, while the corrective waves are adjustments or corrections to the trend.
However, waves may be more complex than this ideal model, which introduces the concept of the "extended wave." In Elliott Wave Theory, an "extended wave" refers to a wave (usually the 1st, 3rd, or 5th wave) that becomes exceptionally long within an 8 wave cycle, exceeding the length of other waves. In this case, this particularly long wave will be broken down into several smaller waves rather than being a single wave.