# ELLIOTT WAVE THEORY - THE REVISED RULES

The following are the revised Elliott Wave Theory rules. They have never been published, but I have encountered them frequently enough in my own research to adapt them.

The "Original Elliott Wave Rules" were publicized in the "*Elliott Wave Principle: Key To Market Behavior*" book by A. J. Frost and Robert Prechter about
42 years ago.

In real trading situations, Elliotticians are best advised to refer to the original rules first and apply the new ones only when there is no better option.

## THE ORIGINAL ELLIOTT WAVE RULES

## THE __NEW__ ELLIOTT WAVE RULES

### [MOTIVE WAVES]

DIAGONALS

DIAGONALS

2. In a leading or an ending expanding diagonal, wave 1 is shorter than wave 3 and wave 3 is shorter than wave 5.

3. In a leading diagonal, waves 1, 3, and 5 may either be ALL motive waves or ALL zigzags.

4. Wave 2 of a diagonal cannot be a flat correction.

5. Wave 4 of a diagonal cannot be a triangle or a flat.

6. No truncation is allowed in an expanding diagonal.

2. In a leading or an ending expanding diagonal, wave 1 is shorter than wave 3, but wave 3 may be longer than wave 5.

3. In a leading diagonal, waves 1, 3, and 5 may be a motive wave or a zigzag / combination.

4. Wave 2 of a diagonal can be a flat correction.

5. Wave 4 of a diagonal can be a triangle or a flat.

6. Truncations in expanding diagonals may happen.

### [CORRECTIVE WAVES]

2. Wave B of a flat should retrace at least 90% of wave A.

2. Wave B of a flat should retrace at least 80% of wave A. (**)

2. In an expanding triangle, wave A should be shorter than wave B.

2. In an expanding triangle, either wave A or wave B will be the shortest.

(*) - On a linear vs a logarithmic scale, the height of the same waves may differ. It may happen that wave 1 of a contracting diagonal is longer than wave 3 on a linear scale, but shorter on a log scale. As a result, the original rule may be confusing and quite often incorrect.

(**) - When wave B of a flat correction is a contracting triangle, it's acceptable to use wave A of the triangle, as opposed to the end of the correction (ie. wave E), to measure the 80% retracement.