Overview: What is Wave Personality?
In Elliott Wave Theory, Wave Personality is the guideline that each of waves 1–5 and A–E has its own characteristic personality. Each wave’s personality arises from the crowd psychology of market participants in each phase, and repeats across eras.
Therefore, it is an important clue when estimating which wave a currently developing wave is. It is said to apply particularly well to waves of primary degree and above (the hierarchy of waves observable on daily charts), and is used as supporting evidence to reinforce wave counts.
Illustrated Chart
① Motive wave personalities (waves 1–5) — Click to expand
② Corrective wave personalities (waves A–C) — Click to expand
Each Wave’s Personality (Details)
Motive Waves (waves 1–5)
- A wave that occurs while most investors still believe in the downtrend
- Seen as “a temporary rebound”; many investors adopt a sell-the-rally stance
- Investor fear is strong, with widespread concern that “lows may be updated again”
- Tends to be a deep correction in price, sometimes erasing most of wave 1’s rise
- Often the most powerful and largest in scale. The most likely to extend
- Shows signs such as gaps in the rise, large volume, and Dow Theory trend confirmation
- Tends to be a sideways corrective wave. Often a flat, triangle, or complex corrective wave
- Tends to take a different form from wave 2 (alternation)
- Investor sentiment is fairly bullish, but the actual market tends to be weaker than expected
- When wave 3 extends, wave 5 tends to be about the same size as wave 1; failures also occur
Corrective Waves (waves A–E)
- Investor optimism still dominates and it is seen as “merely a correction”
- If it ends in 3 waves it develops into a flat/triangle; if in 5 waves, into a zigzag
- “The deceptive wave.” Strongly tends to mislead investor judgment
- The situation “the index is rising but something doesn’t feel right” is likely a wave B
- Tends to be a large decline that completely shatters investors’ optimistic views
- A rising wave appearing as the 4th subwave of a triangle
- Stock indexes rise but the number of rising individual stocks narrows
- The final wave of a triangle. May temporarily break the lower support line
Detailed Points
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Characteristic personalities born from crowd psychology repeat across eras
Each wave’s personality is born from the crowd psychology of market participants in each phase. Since crowd psychology patterns repeat across eras, each wave’s personality is similarly observed repeatedly.
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Applies especially well to primary degree and above (the hierarchy of waves observable on daily charts)
The wave personality guideline applies especially well to waves of primary degree and above. Primary degree refers to the wave hierarchy of a scale observable on daily charts (→ Wave Degree). In smaller wave degrees, personalities may not appear as clearly.
Related Terms
Summary
Wave Personality is the Elliott Wave guideline that each of waves 1–5 and A–E has a characteristic personality born from the crowd psychology of market participants.
Each wave has its own psychological profile: Wave 1 is skepticism, Wave 2 is fear, Wave 3 is the strongest, Wave 4 is consolidation, Wave 5 is peak optimism; Wave A is the extension of optimism, Wave B is a deceptive rally, Wave C is a large decline that shatters optimism, and Waves D and E are characteristic waves within a triangle. It applies especially well to waves of primary degree and above, and serves as supporting evidence for wave counts.
