Elliott Impulse Wave (Bullish) / 5-Wave Impulse (Bullish)
General reference values based on Elliott Wave Theory. Actual success rates vary significantly depending on market conditions, timeframe, and instrument.
The fundamental pattern of Elliott Wave Theory, consisting of 5 waves (1-2-3-4-5) in the trend direction. Odd waves (1, 3, 5) are impulse waves in the trend direction, while even waves (2, 4) are corrective waves against the trend. The internal structure is 5-3-5-3-5. Wave 3 is typically the longest, with the highest volume. In a bullish impulse, the five waves progressively make higher highs, completing at Wave 5's peak.
Enter long after confirming a reversal at Wave 2's bottom. Or enter on confirmation of Wave 3's breakout. The ideal entry point is where Wave 2 retraces 61.8-78.6% of Wave 1. Bullish candlestick patterns (hammer, engulfing) at Wave 2's bottom increase reliability.
Wave 3 target: 1.618 times Wave 1 extension. Wave 5 target: equal to Wave 1, or 0.618 times the range of Waves 1-3. If Wave 3 is extended, Wave 5 tends to equal Wave 1. Overall target: also reference 2.618-4.236 times Wave 1 extension.
Place a stop-loss slightly below Wave 1's starting point. For Wave 2 entries, set below the wave origin (0). For Wave 3 entries, set slightly below Wave 1's peak. Ensure a minimum risk-reward ratio of 1:2.
Ideally, volume peaks at Wave 3. Volume at Wave 5 is usually lower than Wave 3 (divergence). Volume tends to decrease during Wave 2 and Wave 4 corrections. Volume-price divergence is an important signal for predicting Wave 5's completion.