A step-by-step Elliott Wave trading strategy applied to impulse waves. Focus on wave 3 and wave 5 entries with defined stop-loss levels.
Description
This entry outlines a systematic approach to trading impulse waves using Elliott Wave analysis. The core strategy is to identify impulse waves in progress, enter at the completion of corrective sub-waves, and exit at Fibonacci projection targets.
Steps
- STEP 1: Identify the larger-degree trend. Confirm whether price is in an actionary (impulse) or corrective phase at the Primary or Intermediate degree.
- STEP 2: Within the actionary phase, identify the current position: which sub-wave is in progress? Are we in wave 1, 3, or 5?
- STEP 3: Wait for a corrective wave to complete (wave 2 or wave 4). Enter in the direction of the trend as the correction ends and the next impulse begins.
- STEP 4: Set stop-loss: for wave 3 entry, stop below wave 1 start. For wave 5 entry, stop below wave 4 end (overlap rule boundary).
- STEP 5: Set profit target: wave 3 target = wave 1 length × 1.618 from wave 2 end. Wave 5 target = equality with wave 1 (if wave 3 extended) from wave 4 end.
- STEP 6: Monitor for signs of wave completion: channel line reached, throw-over, oscillator divergence. Exit at or before the target.
Key Points
- The highest-probability trade in Elliott is entering wave 3 after wave 2 completes
- Wave 5 trades have lower probability (truncation risk) but can be profitable with tight stops
- Never attempt to trade every sub-wave — focus on the clearest setups
