Elliott Wave Rules and Guidelines
Three rules can never be broken. Everything else is probability. Here is the short list.
Updated August 2026 · 2 min read
The three hard rules
- Wave 2 never retraces more than 100% of wave 1.
- Wave 3 is never the shortest of waves 1, 3 and 5.
- Wave 4 never enters the price territory of wave 1 (in an impulse).
Break one of these and the count is wrong — relabel it.
Guidelines worth remembering
- Alternation — if wave 2 is sharp, wave 4 tends to be sideways.
- Extension — usually one of waves 1, 3 or 5 is much longer.
- Channelling — impulses often respect a parallel channel.
Key Fibonacci ratios
- Wave 2: 50–61.8% of wave 1
- Wave 3: 161.8% of wave 1
- Wave 4: 23.6–38.2% of wave 3
Apply the rules yourself
In WaveMaster every exercise checks your count against these rules automatically, so you learn where a label breaks instead of guessing.