| Most impulses contain
what Elliott called an extension. Extensions are elongated
impulses with exaggerated subdivisions. The vast majority of
impulse waves do contain an extension in one and only one of
their three actionary subwaves. At times, the subdivisions of an
extended wave are nearly the same amplitude and duration as the
other four waves of the larger impulse, giving a total count of
nine waves of similar size rather than the normal count of
"five" for the sequence. In a nine-wave sequence, it
is occasionally difficult to say which wave extended. However,
it is usually irrelevant anyway, since under the Elliott system,
a count of nine and a count of five have the same technical
significance. The diagrams in Figure 1-5, illustrating
extensions, will clarify this point.
Figure 5
The fact that extensions
typically occur in only one actionary subwave provides a useful
guide to the expected lengths of upcoming waves. For instance,
if the first and third waves are of about equal length, the
fifth wave will likely be a protracted surge. (In waves below
Primary degree, a developing fifth wave extension will be
confirmed by new high volume, as described in Lesson 13 under
"Volume.") Conversely, if wave three extends, the
fifth should be simply constructed and resemble wave one.
In the stock market, the most
commonly extended wave is wave 3. This fact is of particular
importance to real time wave interpretation when considered in
conjunction with two of the rules of impulse waves: that wave 3
is never the shortest actionary wave, and that wave 4 may not
overlap wave 1. To clarify, let us assume two situations
involving an improper middle wave, as illustrated in Figures 1-6
and 1-7.
|
Figure
1-6
|
Figure
1-7
|
Figure
1-8
|
In Figure 1-6, wave 4 overlaps
the top of wave 1. In Figure 1-7, wave 3 is shorter than wave 1
and shorter than wave 5. According to the rules, neither is an
acceptable labeling. Once the apparent wave 3 is proved
unacceptable, it must be relabeled in some way that is acceptable.
In fact, it is almost always to be labeled as shown in Figure
1-8, implying an extended wave (3) in the making. Do not
hesitate to get into the habit of labeling the early stages of a
third wave extension. The exercise will prove highly rewarding,
as you will understand from the discussion under Wave
Personality in Lesson 14. Figure 1-8 is perhaps the single most
useful guide to real time impulse wave counting in this course.
Extensions may also occur within
extensions. In the stock market, the third wave of an extended
third wave is typically an extension as well, producing a
profile such as shown in Figure 1-9. Figure 1-10 illustrates a
fifth wave extension of a fifth wave extension. Extended fifths
are fairly uncommon except in bull markets in commodities
covered in Lesson 28.
.
Figure 1-9
Figure 1-10 |
