Elliott Wave Theory: Motive Waves

A motive wave is a price movement in the direction of the main trend.

 Motive waves always subdivide into five smaller waves.

Guidelines for identifying Motive waves correctly

• Wave two never retraces more than 100% of wave one

• Wave four never retraces more than 100% of wave three

• Wave three is often the longest and most powerful wave

• Wave three always travels beyond the end of wave one

Sub waves of Motive waves are always denoted by numbers

There are two types of motive waves: Impulse and Diagonal waves

1. Impulse waves

This is the most common type of motive wave and they are easy to identify

In this type of wave, wave four never enters wave one`s price territory.

The primary objective is to propel the market to move in a certain direction, hence, wave 1, 3 and 5 are the motive waves and sub wave 3 is specifically an impulse wave.

Wave Extensions

Most impulse waves contain Extensions

An extension is usually present in only one of the three impulse waves 1, 3 and 5.

Extensions provide a useful guide to expected length of upcoming waves.

If wave three is extended then wave one and wave five look equal in length.

Wave three is the most commonly extended wave.

 If an extension occurs in wave one then the next correction target is wave two.

Truncation

Sometimes impulse waves may contain truncation. 

Truncation is the situation where the fifth wave does not move beyond the end of the third wave.

It usually occurs when there was a strong third wave.

To easily identify a truncation, ensure that the fifth wave contains the necessary five sub waves.  

  

2. Diagonal waves

In Diagonal waves, the third wave is never the shortest and wave four almost always enters the price territory of wave one.

All the wave formations in Diagonal waves produce a count of threes. So all waves counting from 1-5 will produce a count of 3-3-3-3-3.

There are two types of Diagonal waves: Ending and Leading Diagonals

Ending Diagonal

Ending diagonals occur in fifth waves.

It occurs when the preceding move was too steep

It takes the shape of a triangle

Ending diagonals, Truncations and wave five extension indicate that there will be a huge trend reversal.

Leading Diagonal

They usually occur in the first wave of an impulse wave but their structure is the same as Ending diagonals

Sub waves in a Leading diagonal form a 5-3-5-3-5 pattern.

Next Lesson