Overview
During corrections, the point where volume reaches its lowest level often marks the end of the correction.
As a corrective wave progresses, market participants lose interest and volume gradually declines. The point where volume reaches its lowest level is a sign that buying/selling energy has been exhausted, increasing the probability that the next motive wave begins from there.
Volume distribution within a motive wave also has characteristic features. Below primary degree, the standard pattern is for volume to peak at wave 3 and for wave 5 volume to be less than wave 3 volume. Conversely, when wave 5 volume becomes equal to or greater than wave 3 volume, it is a sign that wave 5 extension may be occurring.
Illustrated Chart
① Standard pattern: Wave 3 volume > Wave 5 volume — Click to expand
② Wave 5 extension signal: Wave 5 volume ≥ Wave 3 volume — Click to expand
Detailed Points
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Corrective phases: the point where volume reaches its lowest level is a sign of correction completion
As a corrective wave progresses, volume declines over time, and the point of lowest volume serves as a marker of correction completion.
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Below primary degree: Wave 3 volume > Wave 5 volume is standard
Below primary degree, the standard pattern is for volume to peak at wave 3 and for wave 5 volume to be less than wave 3 volume.
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Wave 5 volume ≥ Wave 3 volume → Wave 5 extension signal
When wave 5 volume becomes equal to or greater than wave 3 volume (the reverse of standard), it signals that wave 5 is extending.
Related Terms
Summary
Volume is an important auxiliary indicator in Elliott Wave analysis. It tends to decline over time during corrections, and the point of lowest volume serves as a marker of correction completion.
Below primary degree, volume normally peaks at wave 3 and wave 5 volume is less than wave 3 volume. Conversely, when wave 5 volume becomes equal to or greater than wave 3 volume, it can be read as a signal that wave 5 is extending.
