The motive Elliott wave is the trending phase of the Elliott wave cycle. Though, one can easily grasp what is a motive Elliott wave, there are more advanced trading techniques one can deduct from the Elliott wave theory relating to the motive wave.
Motive Elliott Wave Advanced Trading Techniques
After all, it now becomes clear to me that if a financial instrument goes up or down in five waves (or moves) and reaches a key level, one will expect a change of the current market pattern (rotation of a market pattern).
Nevertheless, I would like to remind Elliott traders that we are just deducting another principle from the motive Elliott wave price structure.
The key point is the change of the market pattern.
Note that a market pattern is not a chart pattern. The three market patterns are the
rising, declining and horizontal channels.
Therefore, if a stock, commodity or currency pair rises in five waves (moves)
and reaches a key level, one will expect a change of the market pattern. In this case, one is expecting either a declining or horizontal channel. So the rising channel can change into a declining or horizontal channel.
On the other hand, if a financial instrument declines in five moves or waves and reaches a key support level, one will expect a change from a declining channel to either a rising or horizontal channel.
Similarly, one will expect either a bullish or bearish breakout after five moves in a horizontal channel. In that instance, the price has completed five waves or moves in a horizontal channel, going up and down (balanced market).
Note that according to the Elliott wave principle, a valid motive wave is always followed by a correction.
An Elliott wave correction is always the result of a change of market pattern after an impulse or motive wave. Though, this is primarily true during an Elliott wave cycle, it is also true in other cases.
Putting the real definition of a motive wave aside, all we do care about in this case is the fact that there is often a rotation (change) of a market pattern if the price reaches a key level after five moves or waves up or down.
A common example is ABCDE correction. Really, though this is not a motive wave, the price did move five times horizontally (in a horizontal channel). When ABCDE correction is in place, one will expect a rotation of the horizontal channel. In other words, one will expect a change of the current balanced market pattern in the form of a bullish or bearish breakout.
The essential Questions To Ask
1/ Did the price rise or decline or oscillate in five waves to a key level?
2/ What is the current market pattern?
One should not assume that the rotation of the current market pattern is definite. It is only probable. Therefore, one must use a different times frame trading strategy to control the risks.
The price can continue to rise due to an extension.
Another thing that one should bear in mind is the higher degree Elliott wave structures that interlinks with the lower degree wave structures.
To avoid a repetition, I will refer traders to the following links:
Fifth wave extensions
Higher degree Elliott wave count
Talking About Motive Wave
1/ Generally, the motive wave is formed of the 1st, 2nd, 3rd, 4th and 5th Elliott waves. Theoretically, it is the motor or engine of the Elliott wave cycle.
2/ Roughly 66% of the motive wave is formed of the impulse waves (1, 3, 5). In contrast, 33% of it regroups the contra trend (2, 4). It goes without saying that 33% of the time a bullish trend will pull back. Similarly, a bearish trend will rally 33% of the time. Note that those are just probabilities, and one should not expect the same percentage every time.
3/ The motive wave is always either in a rising or declining channel.
4/ Usually the 3rd wave is the strongest part of the motive wave.
5/ One can use the predictive fractal patterns of the first wave to forecast the whole motive wave.
6/ The fractal structures of the second Elliott wave also help to forecast the corrective phase of the Elliott wave cycle.
7/ There is usually equality (magnitude or length) between the first and fifth Elliott waves.
8/ The first, 3rd and fifth wave can be extended.
9/ The third wave will extend more often than 1st and 5th.
10/ The fifth wave is the only impulse or motive wave that can be confined in a triangle. Though a normal impulse or motive wave could not be in a triangle, when the fifth Elliott wave is an ending diagonal, it will be in a triangle instead of the normal rising or declining channel.
11/ The fourth wave of a motive is often shallow.
Usually, one will record a 38.2% Fibonacci retracement, and rarely 50% Fibonacci retracement of the third wave during the 4th wave.
12/ There is often alternance between the 2nd and 4th waves. When the 2nd wave is prolonged, one will expect a swift 4th Elliott wave. Similarly, when the 2nd wave is deep, one will forecast a shallow 4th wave and vice versa.
For more information check also Elliott wave explained and rules.
There is so much one can do with the Elliott wave principle and rules relating to the motive wave. By using logical deductions that do not violate basic market principles, one can build more advanced Elliott trading strategies. The market patterns rotation after five waves or moves up, down and horizontally is true during normal impulse waves (1, 3, 5) but also during a motive and non motive price action or structure that are formed of five moves or waves. One should be guarded to apply that strategy like a scientific formula. It is also advisable to use it in conjunction with the top-down trading method.
As always I enjoy sharing eyes opening Elliott wave trading tips and tricks and I hope you will find this material useful.
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