Guidelines of Alternation
There’re rules and guidelines in the Elliott Wave Theory. You must follow all the rules we went through in the previous articles, but the guidelines are not written in stone. In other words, guidelines not always appear but they are in a sufficient number of cases, so we shouldn’t ignore them.
What is Alternation?
Simply put, an alternation is about expecting some difference of similar waves’ expression inside a pattern by depth, complexity, and duration. Alternation happens inside impulses and corrections. Let’s see some examples.
Alternation in Impulses
Usually, there’s a relation between waves two and four in an impulse. There’s an upward impulse on the next chart. Wave (ii) of this impulse is sharp, but wave (iv) moves sideways. So, that’s how alternation works in impulses, which have two corrections inside – waves two and four. If alternation occurs, then if one correction has direction, the other one hasn’t got one.
Also, the wave (ii) is pretty easy here, but the wave (iv) has more waves inside, so there’s another alternation by complexity.
The chart below shows two alternations. Inside the wave (iii) we have sharp wave ii, so, as you can guess, wave (iv) is sideways. Another example is in wave iii, its wave two moves sideways and the wave four is sharp, so the order has changed. That’s also a kind of alternation when you face such a successive changing in a shape in waves two and four.
Alternation in Triangles
Waves inside corrections subdivide into Simple, Complex and Most Complex. Inside triangles, one of the waves tends to be the most complex. As you can see on the chart below, wave B has the most complex structure while other waves are Simple or Complex.
Alternation in Zigzags
Sometimes one of zigzag’s waves has more complex structure than others. The next chart represents a case with a complex wave ((c)) in a relation to waves ((a)) and ((b)). However, if you face with a simple wave A and a complex wave B, then likely a wave C will be a simple one as well as the wave A.
Alternation in Double Zigzags
Waves of double zigzag could also express some difference from each other. Let’s have a look at the chart below. The wave (w) is simple, the wave (x) is complex and the wave (y) is the most complex. Thus, if we have quite easy waves W and X of a double zigzag, we shouldn’t rule out a possibility of complexness of the wave Y.
Alternation in Flats
The consistency ‘Simple-Complex-Most Complex’ could also apply to flats. The next chart shows a case with the most complex wave C. At the same time, wave B could be the most complex while a massive rally in wave C expresses itself as a simple wave.
The Bottom Line
Alternation is one of the most useful guidelines, which helps us to understand which style of a wave we could face with in the next markets’ stages. It’s not a direct rule, but a very powerful additional tool to improve wave counts.
Other articles in this section
- Fibonacci Ratios and Impulse Waves
- What is a triangle?
- Double Three and Triple Three patterns
- Double Zigzag
- Zigzag and Flat patterns
- Advanced techniques of position sizing
- What does ‘truncation’ mean?
- What is an extension?
- Ending Diagonal Pattern
- How to trade gaps
- Leading diagonal pattern
- Wolfe waves pattern
- Three drives pattern
- Harmonic patterns
- What is an impulse wave?
- Motive and corrective waves. Wave degrees
- Intoduction to Elliott Wave analysis
- How to trade breakouts
- Trading Forex news
- How to place a Take Profit order?
- Risk management
- How to place a Stop Loss order?
- Technical indicators: trading divergences