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Wave invalidation level

The price at which an Elliott labelling is simply wrong — not a stop-loss and not a target, but the level whose breach means the count has to be thrown away and started again.

Every candidate count stocks-llm publishes carries one, and it is the most defensible number the method produces. Because the three inviolable rules are stated as price relationships, each labelling implies a price beyond which it cannot survive: for a count whose wave 2 is running, it is the point where wave 1 began, since a retracement past there is more than the whole of wave 1; for one whose wave 4 is running, it is the edge of wave 1’s territory that wave 4 may not enter. The level is not a matter of opinion in the way the labelling is — given the labelling, the level follows.

It is emphatically not a stop-loss, and reading it as one is the most likely way to misuse this glossary. A stop-loss is a decision about how much of your own money you are prepared to lose; an invalidation level is a statement about a chart-reading, and the two have no reason to sit at the same price. Nor is it a prediction that price will stop there or turn there. All it says is: below (or above) this, whoever drew this count has to draw a different one. That makes it useful in one specific way — it is the falsifiable part of an otherwise subjective description, and a count published without one is asking to be believed rather than checked.

Two practical points about how it behaves here. Which SIDE the level sits on depends on the count’s direction and on whether the sequence is finished: an advance in progress is invalidated from below, while a completed five-wave sequence is the mirror, invalidated when price pushes on past where it was said to have ended. And a level is only a claim while price has not already met it — stocks-llm refuses a candidate whose invalidation the latest close has already crossed rather than showing it as a live count, because a labelling whose own condition has failed is not a weaker reading, it is a dead one. Levels are computed nightly from delayed daily closes and shown with their as-of date. Nothing here is advice.

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Counts sitting at their invalidation level →

Related terms

  • The Elliott wave principle — A way of describing a share’s path as a repeating sequence of five waves with the trend and three against it — and the most subjective thing in this glossary, which is why stocks-llm publishes a candidate labelling with the price that would kill it rather than "the" count.
  • 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.
  • Corrective wave (the A-B-C) — The three-wave move that gives part of an advance back — labelled A, B and C, and the half of Elliott’s method with far softer rules than the five-wave leg it corrects.
  • ZigZag pivots (swing highs and lows) — The turning points a chart is reduced to before any wave can be counted — each one a high or low that stands out from the sessions either side of it, with the small wiggles filtered away.

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.

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Informational only — NOT financial advice.

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