Typical First Wave Down
Here’s the structure of the very first wave down of an Elliott Wave sequence that’s often missed, or just as often, misread as a countertrend move, or fourth wave (in 4 waves), with good reason.
It’s actually two waves in one. There’s a full first wave down (in 5 waves) and then a small retrace to the previous fourth wave, before a second wave of five waves sets in. The second wave of five is just as long as the first wave of 5. If you measure using a fibonacci extension tool, you’ll see that the entire sequence ends up being exactly 1.618 times the first wave (of 5). That’s the same measurement you’ll find in a 3 wave countertrend move. However, the first wave down has a very clear set of two waves of 5 subwaves each.
Of course, it’s fractal, so any subwaves of lesser degree need to be in 5.
After the first wave down, the market retraces 62%.