Concept
Elliott Hard Rules
Elliott Hard Rules are Elliott & Harmonics concepts. The Library holds 3 implementations, each one a working definition you can pull into Quant.
wave 2/3/4 constraints
Top Elliott Hard Rules indicators
3 total
What are the Elliott Hard Rules?
The Elliott hard rules are the three constraints an impulse count must satisfy, as codified in Frost and Prechter's Elliott Wave Principle: wave 2 never retraces more than 100% of wave 1, wave 3 is never the shortest of waves 1, 3, and 5, and wave 4 never enters the price territory of wave 1. Breaking any one invalidates the count outright rather than making it unlikely; the overlap rule is relaxed only in diagonals, the wedge-shaped motive wave variant.
The rules matter because they make an interpretive framework falsifiable: each one doubles as a price level at which a labeling is demonstrably wrong. Rule-based wave tools therefore anchor invalidation lines at the start of wave 1 and at the wave-1 extreme. Everything else in the framework, alternation, channeling, and ratio tendencies included, is a guideline: a probability statement, not a requirement.
How traders use it
- As objective invalidation: a trader positioned on a wave-3 count knows the idea is wrong if price crosses the start of wave 1, which turns a subjective count into a concrete stop level.
- To prune candidate counts: manual and automated analysts generate multiple labelings, discard every one that breaks a rule, and rank the survivors by how well they fit the guidelines.
- To classify structure: persistent overlap between waves rules out an impulse, pushing the analyst toward a corrective or diagonal interpretation instead of a trend count.
Elliott Hard Rules vs related concepts
Elliott Guidelines: Guidelines (alternation, equality, channeling) describe what usually happens, and breaking one merely weakens a count. Rules describe what must happen, and breaking one kills the count.
Fib Wave Relationships: Ratio tendencies such as wave 3 reaching 1.618 of wave 1 help rank competing counts, but none of them is binding; a count that satisfies the three rules stands even when every ratio preference is missed.
Related concepts · Elliott grammar
Concept family
Elliott & Harmonics
33 concepts mapped · 17 in the Library
Elliott Hard Rules FAQ
What are the three rules of Elliott Wave theory?
For an impulse: wave 2 cannot retrace beyond the start of wave 1, wave 3 cannot be the shortest among waves 1, 3, and 5, and wave 4 cannot overlap the price range of wave 1. Diagonals are the recognized exception to the overlap rule. Everything else in the framework, including all Fibonacci relationships, is a guideline rather than a rule.
Does wave 3 have to be the longest wave?
No. The rule only forbids wave 3 from being the shortest of the three actionary waves. It is frequently the longest and strongest, particularly in stock indexes, but a count with an extended first or fifth wave and a middling third remains valid so long as the third still exceeds at least one of the other two.
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