Impulse Waves

Question 1

What is the basic pattern Mr. Elliott showed a trending market moves in?

Answer 1

A 5-3 wave pattern.

Question 2

What is the first 5-wave pattern in the cycle called?

Answer 2

Impulse waves.

Question 3

What is the last 3-wave pattern in the cycle called?

Answer 3

Corrective waves.

Question 4

Which waves in the 5-wave pattern are considered motive (moving with the trend)?

Answer 4

Waves 1, 3, and 5.

Question 5

Which waves in the 5-wave pattern are considered corrective (moving against the trend)?

Answer 5

Waves 2 and 4.

Question 6

What is the primary cause of Wave 1 formation?

Answer 6

A small number of people suddenly feeling the price is cheap and buying.

Question 7

What is a key rule regarding the height of Wave 2?

Answer 7

Wave 2 can never retrace more than the entire height of Wave 1.

Question 8

Which wave is usually the longest and strongest of the five?

Answer 8

Wave 3.

Question 9

What happens during Wave 3 to cause the price to rise rapidly?

Answer 9

The mass public realizes the trend is over and follows the new trend.

Question 10

What does Wave 4 signal regarding the trend move?

Answer 10

It signals that the best part of the trend move is over.

Question 11

What psychological factor mostly drives Wave 5?

Answer 11

Hysteria.

Question 12

What is the rule regarding ‘Extended Impulse Waves’?

Answer 12

One of the three impulse waves (1, 3, or 5) will always be extended.