Constructing wave cycles, Fibonacci spans, and time-price squares

Three construction layers

Editorial note: this lesson treats wave-and-ratio work as a three-layer construction job. First assemble an eight-wave skeleton so the impulse wave and the correction wave are labeled as testable parts. Next measure the countertrend legs with 0.618-family spans. Then convert the resulting price number onto a circular time-price grid.

The archive facts describe that historical workflow. Editorial reading: the layers are a way to state a chart hypothesis, not a description of how a market must behave.

Build the eight-wave skeleton

Elliott wave construction treats a complete market cycle as five waves in the trend direction followed by three countertrend waves, an eight-wave unit.

A full wave cycle is built from an impulse wave of five numbered, alternating-direction waves plus a correction wave of three alternating waves labeled a, b, and c.

Assemble the abc correction

An abc correction is assembled as a three-wave countertrend. The first wave starts against the prevailing trend, the second retraces that wave, and the third finishes the countertrend move.

A zigzag in an advancing market is constructed as a 5-3-5 three-wave pattern whose wave B peak stays below the start of wave A. The same pattern is inverted in a declining market.

Measure Fibonacci spans

When those countertrend legs are measured, wave A and wave C price spans are compared with ratios drawn from the Fibonacci series.

The same Fibonacci ratios are applied to measured price spans so later price objectives can be projected from the labeled structure. That measured price distance is a Fibonacci span.

The golden ratio used in that measurement is the ratio of consecutive Fibonacci numbers and equals 0.618. A golden-section split divides a length so the smaller-to-larger part equals the larger-to-whole part, a proportion that remains 0.618.

Map the price onto a time-price square

A time-price square maps a market number such as a price onto degrees of a circle so price, time, and pattern can be compared on one geometric scale.

Editorial reading: the price number that comes out of the labeled Fibonacci span is the market number placed on that circular grid, so the wave labels, the 0.618 spans, and the geometric scale can be read together.

State one chart hypothesis

Editorial reading: after the eight-wave skeleton is labeled, the countertrend Fibonacci spans are measured, and the resulting price is mapped onto the time-price square, the three layers form one chart hypothesis that can be kept or discarded when later price action arrives.