EW Master Class—Corrective Waves

Overview of Corrective Waves





Fibonacci Guidelines

Five Wavers
Let me start by saying that there are a lot of errors in “The Elliott Wave Principle.” I’ve written about many of them before, but I haven’t spent a lot of time on the issue of “5-wavers,” and the difference between the two types. It isn’t addressed at all in the book. In fact, even though impulsive waves are addressed, the book doesn’t give the wave measurements the import it deserves. I’m not going to address all of this here, but I will do a brief overview of the difference between 5-wavers.

There are two types of 5 wavers – “simple” and “impulsive.” Impulsive waves are actually very rare and are only found in trending markets, not corrective ones. The rules for an impulsive wave are very strict: Waves 1, 2, and 3 must have 5 subwaves, the wave must have “the right look” (the correct proportions) and the lengths of all the waves must measure to the correct fibonacci lengths.

Since 2009, we have had no impulsive waves in the NYSE indices. However, we have in the Nasdaq-related indices, but only on the way up from the low in 2009.

Simple 5-wavers are found in corrective waves, are not impulsive by any means, but often their fibonacci subwaves will have impulsive wave ratios. You can find “simple fives,” as I like to call them in A, B, and C waves (ie – in any corrective wave).

In the corrective wave structures, you will never find impulsive waves, so here are the obvious corrections to the book:

zigzags never have impulsive waves (structure: simple 5, 3, simple 5)
the C wave of a running, extended, or regular flat is never impulsive (structure: 3, 3, simple 5). In fact, these C waves usually have a 5th wave subwave that is not itself in 5 waves)
So, to your question. C waves are never impulsive waves; they can be “simple fives,” or 3’s, or some other pattern, like an ending diagonal, for example. They can be anything they want to be.

Where a lot of confusion comes in, I think, is that the convention is to number impulsive waves the same way we label “simple fives.” However, one is in a trending market (impulsive) and has VERY strict guidelines and the other is in corrective patterns (simple five) and has no guidelines, other than the fact that you must be able to count 5 waves within them.

The difference between these waves isn’t even addressed in the book and it took me a couple of years early on to prove the difference and refine my own set of rules around them. So, the book is a good start, but Prechter and Frost made changes to Elliott’s work (and some assumptions) that they should not have made. In any event, as I consider the Elliott Wave Principle to be a science, like any science, it evolves as we study it more and truly understand the intricacies. Too many have taken the book at face value, a book written decades ago.

Now to WXYZ labelling: When a corrective large pattern (could be a large C wave) has individual patterns within it, we use the WXYZ labelling. This denotes a more complex structure. For example, when a C wave is composed of 3 zigzags, each of those zigzags should be delineated by a W, Y, or Z. The ends of each subpattern are labelled with an X.

Getting to your last comment about the B wave at the top of the market. Very obviously, it cannot possibly be an impulsive wave up — that’s an absolutely ridiculous conclusion, based solely on the requirements of an impulsive wave. And that’s only one of several reasons it can’t possibly be one — the waves adjacent preclude that opinion. I’ve seen a few ludicrous labelings that I can only just laugh at. It shows a complete misunderstanding of the basic rules of the Elliott Wave Principle, even with the errors in the book.

Hope this helps.