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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. He may be reached at

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Bulkowski's Wave One Extension

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Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 10/17/2017
22,997 40.48 0.2%
9,824 -33.01 -0.3%
741 5.66 0.8%
6,624 -0.34 0.0%
2,559 1.72 0.1%
YTD
16.4%
8.6%
12.3%
23.0%
14.3%
Tom's Targets    Overview: 10/16/2017
23,300 or 22,500 by 11/01/2017
10,300 or 9,700 by 11/01/2017
775 or 725 by 11/01/2017
6,700 or 6,500 by 11/01/2017
2,625 or 2,525 by 11/01/2017

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

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 wave one extension in a bull market. 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 wave one extension in a bear market. 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

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Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. If you are what you eat, I'm fast, cheap, and easy.