Failure (Truncation)

2026.05.09

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“Failure” is a phenomenon in which the end of subwave 5 within an impulse fails to exceed the end of wave 3. It is also called “Truncation.” It is more likely to occur in wave 5 following a large wave 3 extension, and once the end of wave 4 is broken, the failure and a downward trend reversal are nearly confirmed.

Overview: What is a Failure?

In Elliott Wave Theory, a Failure is a phenomenon in which the end of subwave 5 within an impulse fails to exceed the end of wave 3. In English, it is also called “Truncation.”

In a normal impulse, the end of wave 5 is expected to exceed the end of wave 3 (updating to a new high or new low). When a failure occurs, however, the five-wave structure is completed as wave 5, but the endpoint fails to exceed the end of wave 3. This is interpreted as a sign that “the market has lost the momentum to update a new high (or new low).”

Illustrated Chart

① Wave 5 ends without exceeding the end of wave 3 — Click to expand
Wave 3 end line S 1 2 3 4 5 Wave 5 fails to exceed wave 3 end
In a normal impulse, the end of wave 5 breaks above the end of wave 3, but in a failure, wave 5 ends without reaching the wave 3 end line (dashed). The internal five-wave structure of a wave 5 that has resulted in a failure is preserved, but the endpoint cannot make a new high.
How to read the diagram: Note the horizontal line (dashed red) drawn at the end of wave 3. When wave 5 ends without reaching this line, that wave structure is judged to be a failure (truncation).

Detailed Points

  1. More likely to occur in wave 5 following a large wave 3 extension

    Failures are said to be more likely to occur in wave 5 following a large wave 3 extension. The image is that, after wave 3 has used up its momentum, the subsequent wave 5 ends without enough energy to exceed the end of wave 3 (→ Wave Extension).

  2. If wave 4’s endpoint is broken, the failure and a downward trend reversal are nearly confirmed

    When wave 5 reverses without exceeding the end of wave 3 and breaks below the end of wave 4, the failure and a downward trend reversal are nearly confirmed. This is an important practical judgment point for catching the sharp reversal after an impulse completes.

Wave Extension
The tendency for one of waves 1, 3, or 5 of an impulse to become larger than the others. Failures are more likely after a wave 3 extension.
Wave Equality
The tendency for two of waves 1, 3, and 5 of an impulse to be similar in rate of change and time length.

Summary

Failure is a phenomenon in which the end of subwave 5 within an impulse fails to exceed the end of wave 3. It is also called “Truncation.”

It is more likely to occur in wave 5 following a large wave 3 extension, and once the end of wave 4 is broken, the failure and a downward trend reversal are nearly confirmed. It is an important practical judgment point for catching the sharp reversal after an impulse completes.

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