It's a price movement, which subdivides into five waves. Three of them are motive waves (1, 3, and 5), and they move in the direction of a trend. Two of these five impulse waves are corrective waves (2 and 4), so they move against a trend.

Let's study a few examples of impulse waves. Here's a bullish impulse:

And there's a bearish impulse:

So, as you can see, we could have bullish (upward) and bearish (downward) impulse waves. In addition, there are certain rules for impulse waves. If a price movement doesn’t fit these following rules, we should label it differently.

## The impulse wave main rules

• An impulse subdivides into five wave.
• Wave 2 never ends beyond the starting point of wave 1.
• Wave 3 always breaks the high of wave 1.
• Wave 4 never ends beyond the ending point of wave 1. *
• Wave 3 never can't be the shortest.
• Wave 3 must be an impulse itself.
• Wave 1 could be an impulse or a leading diagonal pattern.
• Wave 5 could be an impulse or an ending diagonal pattern.
• Wave 2 can't be a triangle or a triple three structure.

It's just the main rules, but there are also some guidelines as well, which we're going to examine later. As you can see, the two examples above fully fit the rules, so these price movements were labelled as impulses.

* Overlap between waves 4 and 1

As know from the rules, wave 4 can't touch the ending point of wave 1. However, there's an exception from this rule for margin markets like forex. So, from time to time you can see a really short-term overlap between waves 4 and 1. It's important to understand that this exception is pretty rare, so we shouldn't label it on a daily basis on every other wave count.

## What's next after the impulse?

When the fifth wave ends, it's time for a correction or even for a new trend in a different direction. Actually, it's all about the context. It's essential to find out the place of an impulse in a bigger picture, i.e. in the whole wave count.

As we know, the Elliott wave principle works like a Russian nesting doll (matryoshka), so each impulse is built of smaller impulses. Let's imagine that we have an impulse, which is supposed to be the first wave of a bigger impulse. In this case, it's logical to expect just a correction, which could be the second wave.

If we have an impulse as the fifth wave, then it could be a moment for a bigger correction in some form and fashion. So, that's why 'it's all about the context'.

### Extension and truncation

There are two more terms to explain. Sometimes, one or even two (which is quite rare) motive waves (1, 3 or 5) could form an extension. If a wave is extended, it means that it is much longer than the others, so we can observe the inner structure of an extended wave, but we usually can't do so for not extended waves.

Truncation is related only to wave 5. It simply means that wave 5 can't reach the ending point of wave 3. This occurs especially when wave 3 forms a huge extension with a massive rally at the end.

Real examples of impulse wave

As you can see from the chart below, usually there are a few impulses form different wave degrees on the same chart.  So, let’s play this 'Wave Matryoshka' game. There's a huge upward impulse, which labelled as 1-2-3-4-5. Inside wave 3 we could count another impulse like ((i))-((ii))-((iii))-((iv))-((v)). Moreover, we could observe another impulse in wave ((iii)), which counted like (i)-(ii)-(iii)-(iv)-(v).

There’s an impulse in wave (iii) of ((iii)) of 3 in the chart above (the price movement in orange). Below you can see the 30-minute chart, so we can examine this structure in greater detail and find an impulse i-ii-iii-iv-v inside the wave (iii). At the same time, there's another impulse ((1))-((2))-((3))-((4))-((5)) of wave iii. Finally, wave ((3)) also subdivides into five waves like (1)-(2)-(3)-(4)-(5).

Now you see that impulses develop other bigger impulses, brick by brick. Sometimes you can find a beautiful impulse structure. And also sometimes you have to deal with ugly impulses as well. However, these structures, from the really beautiful to extremely ugly ones, in most cases follow the main rules and are parts of a wave count for the particular market.

In the next articles, we’re going to find out more about extensions in impulse waves.

2022-03-14 • Updated

• ## How to start trading?

If you are 18+ years old, you can join FBS and begin your FX journey. To trade, you need a brokerage account and sufficient knowledge on how assets behave in the financial markets. Start with studying the basics with our free educational materials and creating an FBS account. You may want to test the environment with virtual money with a Demo account. Once you are ready, enter the real market and trade to succeed.

• ## How to open an FBS account?

Click the 'Open account' button on our website and proceed to the Trader Area. Before you can start trading, pass a profile verification. Confirm your email and phone number, get your ID verified. This procedure guarantees the safety of your funds and identity. Once you are done with all the checks, go to the preferred trading platform, and start trading.

• ## How to withdraw the money you earned with FBS?

The procedure is very straightforward. Go to the Withdrawal page on the website or the Finances section of the FBS Trader Area and access Withdrawal. You can get the earned money via the same payment system that you used for depositing. In case you funded the account via various methods, withdraw your profit via the same methods in the ratio according to the deposited sums.

## Latest news

USD: Powell Speaks on Cutting Interest Rates

Jerome H. Powell, the Federal Reserve chair, stated that the central bank can afford to be patient in deciding when to cut interest rates, citing easing inflation and stable economic growth. Powell emphasized the Fed's independence from political influences, particularly relevant as the election season nears. The Fed had raised interest rates to 5.3 ...

Robert Kiyosaki, the author of "Rich Dad Poor Dad," has updated his bitcoin price forecast, now projecting the cryptocurrency to hit \$100,000 by September. He plans to acquire more bitcoin before April, attributing his decision to the upcoming halving event. Kiyosaki advises investors to consider adding bitcoin to their portfolios and suggests...

WTT: Currency Pairs To Trade In April

Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.

## Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

### Callback

A manager will call you shortly.

A manager will call you shortly.

Next callback request for this phone number
will be available in