Wave 2 can never retrace more than 100% of Wave 1.

A sideways consolidation pattern where the market lacks deep retracement. Wave A contains 3 internal sub-waves.

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Motive waves move in the direction of the larger trend and consist of five sub-waves. Elliott Wave - Wave Pattern Cheat Sheets eBook : Mento, C

| Rule | Description | | :--- | :--- | | | Wave 2 can never retrace more than 100% of Wave 1. It cannot move beyond the starting point of Wave 1. | | Rule 2: Wave 3 | Wave 3 can never be the shortest impulse wave. It can be shorter than Wave 1 or Wave 5, but not shorter than both. | | Rule 3: Wave 4 | Wave 4 should never overlap with the price territory of Wave 1 (except in diagonal triangles). |

Understanding market psychology is the "holy grail" for many traders. While indicators like RSI or MACD tell you what is happening, the explains why it’s happening and where the price is likely to go next.

You can project targets by drawing trendlines. Connect the ends of Wave 1 and Wave 3, then draw a parallel line starting from the end of Wave 2. This helps predict the termination point of Wave 4 and Wave 5. 4. Common Corrective Patterns