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WaveRatios PDF
WaveRatios PDF
C H A P T E R
10
Wave Ratios and Measurements
Lengths
The price distance of each wave is measured as a vertical distance from the
beginning of the wave to the end of the wave. The length is measured in price
points or units.
In the examples below, the length of each wave is indicated by the length of its
corresponding arrow.
1
Length of Wave 1
1
1
Length of Wave 2 2
2
Length of Wave 3 1
3
2
3
4
Length of Wave 4 1
4
2
5
3
5
Length of Wave 5
1
4
2
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eSignal, Part 2 Applying Technical Analysis
1
Length of Wave One
}
50%
2 of Wave 1
62%
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Chapter 10 Wave Ratios and Measurements
Times
Length of Wave 3
4 24% Length
of Wave 3
4 38%
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eSignal, Part 2 Applying Technical Analysis
5 based on length of 1
1
1 2
1
3 4
5 based on length of 1 3
2 1
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Chapter 10 Wave Ratios and Measurements
4
1
Lower
2 Channel Line
Now draw two lines parallel to the lower channel line connecting the tops of
Waves 1and 3.
Wave 1 Upper
Channel Line 5
5
3
4
1
Lower
Channel Line
2
Expect Wave 5 to end on one of the two upper channel lines. Usually, if Wave 3
was a normal wave, Wave 5 tends to end on the channel drawn from the Wave
3 top. If Wave 3 was extended and a runaway type of wave, Wave 5 tends to
end on the channel drawn from the top of Wave 1.
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eSignal, Part 2 Applying Technical Analysis
38%
2
Only 12% held within a
38% retracement
of Wave One
1
73% Retraced between
50% and 60%
50%
2
62%
62%
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Chapter 10 Wave Ratios and Measurements
Wave 2 Ratio
In the Alcoa Inc. (AA) chart above, Wave 2 retraced between 50% and 62% of
Wave 1.
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eSignal, Part 2 Applying Technical Analysis
3
3
2
2
3
1.75 X 1
1.6 X 1
} 45% of the time
2.62 X 1 3
2.62 X 1
1.75 X 1
} 30% of
the time
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Chapter 10 Wave Ratios and Measurements
Wave 3 Ratios
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eSignal, Part 2 Applying Technical Analysis
30%
}Retrace between 30-50% of
50% Wave 3 60% of the time
1
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Chapter 10 Wave Ratios and Measurements
Wave 4 Ratios
In the Alcoa Inc. (AA) chart above, Wave 4 retraced between 24% and 38% of
Wave 3.
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eSignal, Part 2 Applying Technical Analysis
3 3
4
1
2
0
3
28400
?
1
28300
28200 4
28100
28000 2
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Chapter 10 Wave Ratios and Measurements
Even when Wave 3 is extended, our research has found that the Wave 5 sequence
will often end inside the ratios calculated from 03 where 0 (Zero) is the start of
Wave 1. This is the start of the new Five-Wave sequence. The length of 03 is
extended from the end of Wave 4.
Wave 5 usually ends inside the windows of 62% of 03 and equal to 03 added
to the end of Wave 4.
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eSignal, Part 2 Applying Technical Analysis
Notes
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