What it means
Elliott Wave distinguishes two wave types. IMPULSE waves consist of 5 sub-waves (labeled 1, 2, 3, 4, 5), with sub-waves 1, 3, 5 in the direction of the larger trend and sub-waves 2, 4 as smaller corrections. CORRECTIVE waves consist of 3 sub-waves (labeled A, B, C), moving against the larger trend. Markets alternate between impulse (motive) and corrective (reactive) phases — the framework's core insight.
Why it matters
The impulse/corrective distinction lets you identify whether the current move is part of the dominant trend (impulse) or a correction against it (corrective). Trade entries in the impulse direction at the end of corrective phases have favorable risk-reward — entering with the larger trend after a defined correction.
How to use it
Identify the larger trend (impulse) on weekly/daily timeframe. Look for corrective waves (ABC) ending — typically the C wave completing — as entry points back into the impulse direction. Use Fibonacci retracements (50%, 61.8%) to project where ABC corrections typically end.
Want a worked example or a deeper dive? Ask Rocky how this concept applies to your specific watchlist or trade idea.
Ask Rocky