Constructing wave targets from ratios, triangles and trendlines

A wave count as a drafting problem

Editorial reading: this archive workflow treats a wave count as a drafting problem. An elliott-wave count is a labeled impulse-and-correction count that must stay internally consistent before any ratio, triangle, or trendline measurement is applied.

Once the labels hold, impulse legs are locked to a 1 to 1.618 to 1 skeleton, a contracting-triangle supplies the last-wave target, and a 0.618 fibonacci-retracement is carried forward as a sloping trendline rather than as a flat price.

Lock impulse legs to a 1 to 1.618 to 1 skeleton

Impulse-proportion is the drafting rule that waves 1, 3, and 5 of an impulse are laid out in a 1 to 1.618 to 1 length relationship.

That impulse-proportion construction was illustrated on a Treasury bond decline from the August 1989 high of 101.08 to the May 1990 low of 88.07.

In the illustrated bond sequence, wave 3 exceeded the ideal 1.618 impulse proportion by 2/32.

Construct a fifth-wave target from a contracting-triangle

A contracting-triangle is a five-leg a-b-c corrective container, typically a fourth wave, whose width and apex set the last-wave target and a timing mark. A fourth-wave contracting triangle is constructed from five a-b-c corrections and is treated as the pattern that typically precedes the final thrust of the larger move.

After a triangle breakout, the minimum fifth-wave objective equals the widest part of the triangle, measured from the breakout as the A-to-B distance subtracted from penetration of the lower trendline. That length is the triangle-width-objective: a fifth-wave length taken from the widest span of the triangle and applied from the breakout or from penetration of the lower boundary.

The upper triangle boundary is drawn by ignoring an e-wave-overshoot, a fifth triangle leg that briefly crosses a boundary and is omitted when that boundary is drawn. That construction produced an apex that converged on May 4, with an apex price of 9226 later treated as a support and resistance pivot.

Replace a flat 0.618 level with a sloping line

A fibonacci-retracement is a 0.618 pullback of a completed swing, used here as an anchor point rather than as a standalone horizontal target. A trendline is a sloping boundary that converts a static price ratio into a time-dependent objective or triangle edge.

After five waves down that complete wave 1 of larger degree, the expected wave-2 pullback is a trendline from the start of the move through the 0.618 retracement marked above wave 1’s low, not a flat 0.618 price. That construction is a ratio-anchored-trendline: a line from the origin of a decline through the 0.618 mark above the wave-1 low, so the expected pullback is the line rather than a fixed price.

The 61.8 percent retracement of the 101-08 to 88-07 decline is 96-09. A line from 101-08 through 96-09 stood at 9512 in the week the June contract reached 9510.