According to Elliott’s idea, a trend moves in : an has five waves; 1, 3 and 5 drive, 2 and 4 correct. Our rule looks for the entry at the end of wave 2 – after a pullback into the – and counts on wave 3. Whether wave 3 really comes, nobody knows in advance.
Three rules that always apply
Wave 2 never falls below the start of wave 1. Wave 3 is never the shortest of waves 1, 3 and 5 and rises above the wave 1 high. Wave 4 does not run into the territory of wave 1 (exception: ). With us, the first rule is the : a daily close below the start of wave 1.
How the rule finds waves
A high or low only counts once the price then pulls back by 3 (). Wave 1 is the last confirmed rise, wave 2 the pullback after it. In addition, the page counts the waves on weekly candles (); that is information only and not a criterion of the rule.
Limits – honestly
Counting waves is partly judgment; often several counts fit. Our Elliott rule has been active since Oct 9, 2026 without prior testing. The count in the chart has not been tested on any timeframe. An earlier Elliott rule based on course material was no better than chance with the same geometry for stocks on daily candles. So the buy zone is an area to watch – you make the decision yourself.
Model example: waves in the setup
In the model, the rise from 100.00 (Day 4) to 150.00 (Day 18) is wave 1, the pullback to 114.00 (Day 28) is wave 2 – it retraces 72% of wave 1. The count would be invalid with a daily close below 100.00; the stop, with a buffer, is at 98.00. Whether wave 3 follows is open at the entry.
Model numbers, not real prices. Zone, targets and stop calculated with the constants of the current rule. An example for understanding, not a forecast and not investment advice. Real buy zones in the screener