Technical Analysis Elliott Waves Part 3

Starting Wedge Impulse Wave

The starting wedge impulse wave can only appear in waves 1 or A.

Figure 7.16: Starting wedge impulse wave.

Special offer: "Capturing Profit with technical Analysis"

 

In figure 7.16, there may be, at first, some confusion when waves 3 and 4, within the starting wedge impulse wave, are seen as the start of an extension waves 1 and 2.
You must recognize the starting wedge impulse wave at the start of wave 5 by drawing the wedge pattern.

You know now that the starting wedge impulse wave 5 is really just the top of wave 1 of a higher order wave. The wave that follows is not an extended impulse wave 3, but a correction wave 2.

Rules and Guidelines

• This pattern has 5 waves.
• The price is moving between 2 converging lines, a wedge pattern.
• Wave 1 is an impulse wave or a lower order starting wedge impulse wave.
• Wave 2 is any correction pattern, except a triangle.
• Wave 2 is always smaller than wave 1.
• Wave 3 is an impulse pattern.
• Wave 3 is always bigger than wave 2.
• Wave 3 is never the smallest wave compared to waves 1 or 5.
• Wave 4 can be any correction pattern.
• Waves 4 and 2 are partly overlapping.
• Wave 5 is an impulse pattern or an ending wedge impulse wave.
• Wave 5 is a minimum 50% of the size of wave 4.

The 5 waves of a starting wedge impulse wave have a 5-3-5-3-5 structure.

Example CXP (Corporate Express):
Figure 7.17 is a wave 1 starting wedge impulse wave, starting a new rising trend.

Figure 7.17: Corporate Express, starting wedge impulse wave example.

Ending Wedge Impulse Wave

Ending wedge impulse waves are rare in high order impulse waves. They mostly are found in lower order impulse waves. Because the ending wedge impulse wave is a 5 impulse wave or a wave C correction wave, there will be a market reversal on wave completion.

Figure 7.18: Ending wedge impulse wave.

Figure 7.18 shows an ending wedge impulse wave that can be found in impulse wave 5 or correction wave C.

Figure 7.19: Descending ending wedge impulse wave.

Figure 7.19 shows a descending ending wedge impulse wave.

At first, there may be some confusion when waves 3 and 4, within the ending wedge impulse wave, are seen as the start of extension waves 1 and 2. It is important to recognize the ending wedge impulse wave at the start of wave 5 by drawing the wedge pattern.

You know now that the ending wedge impulse wave 5 is really the end of wave 5 of a higher order wave.

The wave that follows is not an extended impulse wave 3, but a bigger correction wave.

The ending wedge impulse wave can be easily recognized by the internal 3-3-3-3-3 structure.

Search the Internet

Rules and Guidelines

• This pattern consists of 5 waves.
• The price is moving between two converging lines, a wedge pattern.
• Waves 1, 3, and 5 are zigzag patterns.
• Wave 2 is any correction pattern, except a triangle.
• Wave 2 is always smaller than wave 1.
• Wave 3 is always bigger than wave 2.
• Wave 3 is never the smallest wave compared to waves 1 or 5.
• Wave 4 can be any correction pattern.
• Waves 4 and 2 are partly overlapping.
• Wave 5 is a minimum 50% of the size of wave 4.

The 5 waves of an ending wedge impulse wave have a 3-3-3-3-3 structure.

Example AAI (Airtran Holdings Inc):

Figure 7.20: Airtran Holdings, an example of an ascending ending wedge impulse wave.

Figure 7.20 is an example of an ascending ending wedge impulse wave.

Elliott Waves Next -Previous -Part 1 -Part 2 -Part 3 -Part 4 -Part 5 -Part 6 -Part 7

STOCATA Stocks Technical Analysis HOME