Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30 years of stock market experience and widely regarded as a leading expert on chart patterns. His four books, including the best selling Encyclopedia of Chart Patterns, have been translated into seven languages. He may be reached at

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Bulkowski's Basic Motive Wave Pattern

Market

Industrials (^DJI):

Transports (^DJT):

Utilities (^DJU):

Nasdaq (^IXIC):

S&P 500 (^GSPC):

As of 02/03/2012

12,862 156.82 1.2%

5,369 63.27 1.2%

451 1.52 0.3%

2,906 45.98 1.6%

1,345 19.36 1.5%

YTD

5.3%

7.0%

-2.9%

11.5%

6.9%

Tom's Targets Overview: 02/03/2012

13,100 or 12,400 by 02/15/2012

5,500 or 5,150 by 02/15/2012

470 or 440 by 02/15/2012

3,100 or 2,800 by 02/15/2012

1,375 or 1,300 by 02/15/2012

Test Portfolios and CPI

Indus. strength: 4.3%

Mutt Losers: None YTD

Mutt Winners: 2.4%

Wilder RSI: None YTD

CPI:

on 12/20/2011

This page describes the basic motive pattern of the Elliott wave principle, how price moves not in a straight line but in a series of rises and retracements.

The 5 wave motive cycle. Shown is the basic five wave motive phase (as opposed to the three wave corrective phase) of the Elliott wave principle. Price moves in a rise-retrace pattern that is similar to an incoming tide. Notice in the chart to the right that the impulse waves, 1, 3, and 5 travel farther than the corrective waves 2 and 4. This behavior leads to a rising price trend in this example.

The 8 wave cycle. Reference the figure to the left Three of the waves, 1, 3, and 5, move in the direction of the trend of one higher degree (the blue numbers 1 through 5). This is similar to an ocean's tide. If you are looking at a ripple, one higher degree would be the wave. One higher degree from a wave would be the tide.

Counter trend moves 2 and 4 interrupt the movement of the main thrust.

The 5 wave cycle when the trend is downward. The orientation of the basic 5 wave cycle need not be one of a rising price trend. The chart to the right shows a 5 wave pattern in a falling price trend. As described above, the 5 wave cycle obeys the direction of the trend of one higher degree. In the middle chart of the three on this page, each segment of the A wave is composed of 5 smaller segments, not 3 as in an ABC correction.

Basic Motive Wave Pattern Rules

The five wave motive phase has rules that govern its shape. They are listed here.

The motive phase is composed of five waves, three advancing (1, 3, 5) and two counter trend waves, 2 and 4.
Motive waves can head up or down.
The motive phase aligns with the trend of one higher degree.
Wave 2 never moves beyond the start of wave 1.
Wave 3 is never the shortest wave.
Wave 4 never overlaps the end of wave 1.
Waves 2 and 4 tend to alternate in form. If wave 2 is a zigzag, wave 4 will be a flat, for example.
One of the waves, 1, 3, or 5, will often (but not always) be much longer (extended) than the other two.

-- Thomas Bulkowski

Bulkowski's Basic Motive Wave Pattern

Basic Motive Wave Pattern Rules

See Also