Forex Elliot Waves: Wave Motives (2)
There are several guidelines for identifying motive waves that can be taught in labeling the wave count. This guide includes extensions, pruning, channels and equations.
Motive waves generally consist of five subordinate waves labeled 1-2-3-4-5, but one of these subordinate waves can be expanded to form longitudinal impulse waves with additional subordinate waves. Extensions are one of the guides and are usually applied to wave 3, although they can also be applied to wave 5. The three rules give an indication that a wave must be extended. If wave 3 is the shortest wave, or wave 4 touches wave area 1, then wave 3 needs extension. Extensions can be considered as counting four other waves as part of impulse waves but instead labeling them 1-2-3-4-5-6-7-8-9, but waves 3, 4, 5, 6, and 7 are given label as subordinate, or wave with lower level. In this case it becomes 1-2-i-ii-iii-iv-v-3-4-5 with wave v (wave 5 of lower level) being the end of wave 3. It is also possible to extend wave 5 if the wave is not the shortest wave, and wave 4 does not enter the 1st wave area. In this case, extending wave 3 or wave 5 will bring the same overall meaning. And, extensions can occur in extensions.
Generally, subordinate impulse waves in motive waves (waves 1, 3 and 5) will all be higher than previous subordinate impulse waves with wave 3 which is usually the strongest wave. However, wave 5 sometimes fails beyond the end of wave 3. This is called pruning, which is one of the guides. The cut off fifth wave must contain five subordinate waves or the number of waves will not apply. Pruning usually occurs after wave 3 is very strong and indicates a weakness in the previous trend. It is also more common in markets with very high leverage levels, such as the Forex market and Commodity Futures.
Wave 1 and wave 5 tend to show the level of equality in terms of distance. This is one of the guides to help show where wave 5 is likely to end.
It is possible to draw a trend line connecting the ends of wave 1 and wave 3. The channel can then be pulled parallel to the trend line by its base at the end of wave 2. This is the channel guide and helps indicate where wave 4 will end.