Having spoken about Elliott waves for quite some time now it is time to talk about the rules that we might stumble upon while using this theory. And there are three main rules with them.
Although before naming the rules it is important that I name 1 condition – it is necessary to see and understand what market and what wave you are currently trading. although that is both the condition to understand the rule and one of the things that the rules are going to help you understand.
So, here are the three rules of Elliott waves:
Wave 3 can NOT be the shortest wave;
Wave 2 can NOT go beyond the start of Wave 1;
Wave 4 can NOT cross the same closing price area as Wave 1.