First Wave Down

first wave down

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%.