THE HAnDbook oF TECHnICAl AnAlysIs
- San Pei—Three Thrusts. This represents the three trending phases between
accumulation and distribution. This closely resembles Elliott’s three impulsive
numbered waves 1, 3, and 5.
- San Poh—Three Methods. This represents the three corrections after each
thrust. This somewhat resemble Elliott’s three corrective waves lettered as a,
b, and c in upcoming Figure 4.28.
Sakata’s five market phases are illustrated in Figure 4.26. We see that it is very
similar in appearance to Elliott’s. Elliott waves have specific rules and guidelines
with respect to wave construction, whereas Sakata’s five‐phase model is less rigid.
Although Dow’s three‐phase model of market phase may seem initially to
be inconsistent with Sakata’s five‐phase and Elliott’s motive wave model, it can
be shown, using simple chart patterns, that the two models need not necessar-
ily be viewed as distinct from each other. Figure 4.27 depicts Sakata’s five‐phase
model operating within Dow’s three‐phase market. It offers a plausible resolution
between Eastern and Western approaches to market phase analysis.
4.8 Elliott’s Interpretation of Market Phase
Elliott described the markets as moving in an impulsive five‐wave up followed by
a corrective three‐wave down motion. The trending phase is represented by im-
pulse waves 1, 3, and 5. The accumulation phase is represented by the corrective
waves 2 and 4, and in most cases including the entire abc correction itself. Distri-
bution is usually represented by the abc correction. See Figure 4.28.
Figure 4.29 depicts an Elliott wave count for Gold from 2000 to 2012. No-
tice that volume gradually decreases over the span of each significant consolida-
tion, as seen at points 1, 2, and 3. We observe that primary waves 1 and 2 occur
figure 4.26 Sakata’s Five Phase Model of Accumulation, Distribution, and Trend.
