Preface: This article is relatively dry and dull, and I hope that fellow coin enthusiasts will patiently read through it, as the reason classics are classics is that there is not a single superfluous word.
If the basic structure of wave theory is a complete portrayal of market behavior, then wave theory is too simplistic. In reality, the world is not that simple, although concepts like the cyclicality experienced by markets or humans imply precise repetition, the concept of waves allows for infinite variations, which are indeed very pronounced.
Indeed, there are several specific variations regarding the basic themes. Elliott has made careful and detailed explanations and illustrations regarding this. He also noted the important fact that each pattern has identifiable necessary conditions and tendencies. From these observations, he was able to establish a large number of rules and guidelines for reasonable wave identification.
(A thorough understanding of the wave theory's high-level summary will ensure that you at least recognize the concepts and names mentioned in the subsequent sections of the teaching)
Supplementary technical overview:
Most waves appear in impulsive wave forms, where sub-wave 4 does not overlap with sub-wave 1, and sub-wave 3 is not the shortest sub-wave. Impulsive waves can usually be outlined with parallel lines (channel lines). A driving wave within an impulsive wave, namely waves 1, 3, or 5, typically extends, meaning it is far longer than the other two waves. There are two rare variations of driving waves, referred to as sloping triangles; they appear as wedge patterns in one case only at the beginning of a larger degree wave (wave 1 or A), and in another case only at the end of a larger degree wave (waves 5 and C).
There are many variations of corrective waves, primarily referred to as zigzag, flat, and triangle (marked with letters D and E). These three simple correction patterns can be strung together to form more complex corrective waves (whose components are marked as W\ X\ Y and Z). In impulsive waves, the forms of waves 2 and 4 almost always alternate, usually at this time, one corrective wave belongs to the zigzag family, while the other does not. Various corrective waves typically end within the range of wave 4 of the same degree of the previous impulsive wave. Each wave exhibits unique volume behavior, as well as individuality expressed through accompanying momentum and investor sentiment.
