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Written and copyright © 2008-2011 by Thomas N. Bulkowski. All rights reserved.
This page describes the wave one extension pattern of the Elliott wave principle, how price moves not in a straight line but in
a series of rises and retracements.
The figure to the right shows what a wave one (first wave) extension looks like in a bull market. An extension is an unusually long impulse wave with
exaggerated subwaves, according to Frost and Prechter.
Many impulses contain only one extension in their actionary subwaves. That is,
only one of the waves 1, 3, or 5, will be extended. When an extension occurs, it will likely occur during wave 3.
The subwaves within an extended wave have nearly the same duration and amplitude.
Four subwaves join the five wave impulse to complete the extension. I show this as four waves in black followed by five waves in red
in the chart above. Knowing that wave one extends suggests waves three and five will be normal length.
The chart on the right is the same as the prior one but the wave occurs in a bear market. Again, black shows the four wave extension leading to the five wave impulse
in red.
Wave One Extension Rules
The wave one extension has rules that govern its shape. They are listed here.
- The wave one extension is a motive wave composed of nine sub waves, each appearing similar in shape and duration.
- If an extension occurs on wave one, then waves three and five will be normal waves, not extensions.
- Most impulse waves contain extensions (either wave 1, 3 or 5 will be extended).
- Wave 3 is the most commonly extended wave.
-- Thomas Bulkowski
Copyright © 2008-2011 by Thomas N. Bulkowski. All rights reserved. If you are what you eat, I'm fast, cheap, and easy.
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