Impulse wave (the five-wave move)
The five-wave leg that runs with the trend — and the only part of Elliott’s method with hard rules, three of them, which is what makes a candidate count checkable rather than a matter of opinion.
An impulse is the five-wave half of the pattern: waves 1, 3 and 5 push in the direction of the larger trend and waves 2 and 4 interrupt them. Wave 3 is the one most often talked about, because in Elliott’s description it is usually the longest and steepest of the three; wave 5 is the last push, and a completed five-wave sequence is the thing a correction then works against. Three of the five legs have to be finished before a labelling says anything much, which is why stocks-llm reports candidates by how far along they are — a wave 3 in progress, a wave 4 pullback, a wave 5 running, a sequence complete — rather than as one undifferentiated "impulse".
Three rules are inviolable, and they are what a candidate here is actually tested against. Wave 2 may never retrace more than the whole of wave 1: if price goes back past where wave 1 began, whatever is being counted, it is not wave 2. Wave 4 may never overlap wave 1’s price territory. And wave 3 may never be the shortest of waves 1, 3 and 5. The third of those is worth pausing on, because it is the reason a young count is not simply a weaker version of an old one: while wave 5 is still running its length is unknown, so a wave 3 that looks short cannot yet be a violation — wave 5 may finish shorter still. stocks-llm therefore asks that rule only once all five legs are on the board, and a candidate that has only had one or two of the rules put to it says so through its confidence rather than borrowing the credibility of one that has survived all three.
Fibonacci proportions come into it too, and they are treated differently from the rules on purpose. Wave 2 most often gives back between about 38% and 79% of wave 1, wave 3 most often runs at least the full length of wave 1 and classically about 1.618 times it, wave 4 retraces more shallowly than wave 2, and wave 5 tends to land between roughly 0.6 and 1.6 times wave 1. Those are tendencies, not boundaries of the possible, so on stocks-llm they SCORE a surviving candidate and never reject one: a five-leg count with mediocre proportions is still a five-leg count, and the honest place to say so is the confidence word, which is capped at "tentative" whenever a proportion window is missed or a rival labelling survives the same bars. None of it forecasts that a wave runs to its end, and nothing here is advice.
Completed five-wave sequences →
See more terms in the stocks-llm glossary.
Informational only — NOT financial advice. This is an educational definition, not a recommendation to buy or sell anything. Metrics on stocks-llm are delayed data and may be missing or stale. Always verify information independently and consult a qualified financial professional before making any investment decision.