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Elliot Waves Complete Guide | Chapter 2.3 - "Extensions"
Updated
Hello Traders. Here we will examine extensions as a final conclusion for chapter 2.
Chapter 2 - Motive Waves:
2.1 Impulse, Leading Diagonal
2.2 Ending Diagonal , Truncation
2.3 Extension, Fifth Wave Extensions
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What are extensions?
Most impulses contain a degrees called "extensions" An extension is an extended wave with amplified subdivisions within the main picture.
• The majority of impulse waves has one
extension (please refer to the previous post if you are lost on what an impulse is!)
• The most common extension is on wave 3,
although wave 1 and 5 are also possible.
• Subwave 2 could not be labelled as a Wave 4,
because it overlaps with wave (1)!
• Subwave 1 is shorter than wave (1)
→ If Subwave 1 is considered an impulse wave, than an extended wave 3 is the most likely considered as an expectation.
❗If wave 3 is the same size as wave 1, we would expect an extension of wave 5.
❗If wave 3 is extended, wave 5 will often resemble wave 1 in time and length.
Case For Fifth Wave Extension of Fifth Wave Extension
These types of impulsive waves are extremely difficult to trade, and as a consequence, traders will notice them only after the fact. It is common that when the fifth wave extends, margin calls are triggered as the vast majority of traders are caught in the wrong direction.
An extension may also have an extension within itself. Getting confusing? Yes - but this is extremely important when drawing the main picture. This mostly happens in the third of fifth wave of Elliot Waves.
Normally, you would expect a trend change at the point of (1), because five waves took place. But the trend remains intact and new highs are made consistently.
→ This is where novices get eaten by the market in one huge loss, as extensions tend to go on forever.
❗As only one Wave can be extended, if wave 3 is the same size as wave 1, we would expect an extension of wave 5.
Chapter 2 - Motive Waves:
2.1 Impulse, Leading Diagonal
2.2 Ending Diagonal , Truncation
2.3 Extension, Fifth Wave Extensions
------
What are extensions?
Most impulses contain a degrees called "extensions" An extension is an extended wave with amplified subdivisions within the main picture.
• The majority of impulse waves has one
extension (please refer to the previous post if you are lost on what an impulse is!)
• The most common extension is on wave 3,
although wave 1 and 5 are also possible.
• Subwave 2 could not be labelled as a Wave 4,
because it overlaps with wave (1)!
• Subwave 1 is shorter than wave (1)
→ If Subwave 1 is considered an impulse wave, than an extended wave 3 is the most likely considered as an expectation.
❗If wave 3 is the same size as wave 1, we would expect an extension of wave 5.
❗If wave 3 is extended, wave 5 will often resemble wave 1 in time and length.
Case For Fifth Wave Extension of Fifth Wave Extension
These types of impulsive waves are extremely difficult to trade, and as a consequence, traders will notice them only after the fact. It is common that when the fifth wave extends, margin calls are triggered as the vast majority of traders are caught in the wrong direction.
An extension may also have an extension within itself. Getting confusing? Yes - but this is extremely important when drawing the main picture. This mostly happens in the third of fifth wave of Elliot Waves.
Normally, you would expect a trend change at the point of (1), because five waves took place. But the trend remains intact and new highs are made consistently.
→ This is where novices get eaten by the market in one huge loss, as extensions tend to go on forever.
❗As only one Wave can be extended, if wave 3 is the same size as wave 1, we would expect an extension of wave 5.
Note
Elliot Waves Complete Guide | Chapter 1 - "The Overall Cycle"
Note
Elliot Waves Complete Guide | Chapter 2.1 - "Motive Waves"
Note
Elliot Waves Complete Guide | Chapter 2.2 - "Ending Diagonal"
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