Impulse Wave Pattern

Structure

An impulse subdivides 5-3-5-3-5. Waves 1, 3 and 5 are smaller five-wave moves, and waves 2 and 4 are smaller three-wave corrections. This internal structure is what separates a true impulse from a three-wave rally that only looks strong.

Rules that apply

• Wave 2 never moves beyond the start of wave 1.
• Wave 3 is never the shortest of waves 1, 3 and 5.
• Wave 4 never overlaps the price range of wave 1.

Guidelines

• One of the three motive waves is usually extended, most often wave 3.
• Waves 2 and 4 tend to alternate in form: if one is sharp, the other is usually sideways.
• The whole impulse often fits within a parallel channel.
• Wave 5 often shows momentum divergence.

How to confirm an impulse in real time

You cannot be sure an impulse is complete until it ends, but some signs help. A sharp, broad wave 3 that breaks the end of wave 1 with strength is a good sign. A wave 4 that stays above wave 1 and then a wave 5 that makes a new extreme completes the picture. After five waves, expect a three-wave correction of the same degree.

Where impulses appear

Impulses form waves 1, 3 and 5 of a larger impulse, and waves A and C of a zigzag. They also form wave C of a flat. Spotting an impulse tells you a move has a clear direction.

Example in real markets

Large trends in liquid markets often show clean impulses on daily or weekly charts. Long rallies in the S&P 500, extended moves in Bitcoin and steady trends in EUR/USD all provide practice material. Open any market page and try to find the most recent five-wave move.