Basic Elliott Wave Analysis
for trend action, while corrective waves are responsible for retracements against a
trend. It is important to note that impulsive waves are waves that move in the direc-
tion of a wave of one larger degree. This means that for a corrective wave, waves A
and C are considered impulsive waves and wave B a corrective wave. This recursive
subdivision represents the fractal‐like nature of Elliott waves, where all wave de-
grees display a quality of self similarity. No matter which wave degree is observed,
the wave structure will always manifest itself in the form of a 5‐3 construct. Notice,
in Figure 18.2, that the 5‐3 wave structure in the subdivisions of waves (1) and (2)
is replicated at a higher wave degree, labeled as waves encircled numbers 1 and 2.
Referring again to Figure 18.2, motive waves are numbered whereas corrective
waves are lettered. Hence motive waves are numbered as (1), (2), (3), (4), and (5)
with the corresponding corrective waves labeled as (A), (B), and (C). The impulse
waves within the motive wave are numbered (1), (3), and (5) with its corrective waves
labeled as (2) and (4). We observe that impulse waves (1), (3), and (5) subdivide into
waves 1, 2, 3, 4, and 5. Corrective waves (2) and (4) subdivide into waves A, B, and C.
Each wave degree is numbered and lettered differently in order to distin-
guish between the various wave degrees that make up market action. Elliott listed
nine important wave degrees spanning from the Grand Supercycle down to the
Subminuette. See Figure 18.3 for the most widely used labeling conventions.
The time spans associated with four of the most recognizable wave degrees
are as follows:■ (^) Cycle wave degree spans from years to decades
■ (^) Primary wave degree spans from months to years
■ (^) Intermediate wave degree spans from weeks to months
■ (^) Minor wave degree spans from days to weeks
figure 18.3 Labeling Conventions for Various Wave Degrees.