Elliott Wave Rule Engine

The Elliott Wave Rule Engine indicator is a comprehensive pattern recognition tool that scans for concurrent swing structures to identify Elliott and NeoWave motifs. It applies a rigorous rule engine to price action, categorizing movements into 5-swing motive (1-2-3-4-5) or 3-swing corrective (A-B-C) structures across multiple time degrees.

Usage

The indicator displays two distinct swing degrees: Small (blue lines) and Large (orange lines), allowing traders to see internal wave structures within a larger trend.

• Pattern Identification: The tool automatically labels "1-5" for motive waves and "A-B-C" for corrections when a structure completes.
• Motive Alignment: Users can look for alignment between the Small and Large degrees. When both degrees align and meet scoring thresholds, the indicator plots "Buy" or "Sell" labels at the pivot.
• Validation Dashboard: An optional rule dashboard displays PASS/FAIL/WARN statuses for core Elliott Wave rules (e.g., Wave 3 shortest, Wave 4 overlap).
• Signal Scoring: Signals are generated based on "consensus" (how many loop combinations agree on a pivot) and "quality" (how many guidelines are met).

Details

The engine utilizes a looped scan approach for pivot detection. Instead of relying on a single fixed lookback, it iterates through a range of left/right strengths to determine a "consensus" score for every pivot.

The rule engine differentiates between:

• Hard Rules: Must be satisfied for an Impulse (e.g., Wave 2 cannot retrace more than 100% of Wave 1).
• Guidelines: 7 flexible checks including Fibonacci retracement levels, alternation of wave sharpness, and momentum divergence.
• Correction Types: If a motive fails, the engine evaluates Zigzag and Flat structures, identifying expanded or running flats based on Fibonacci ratios.

Settings

Smaller/Larger Wave Swing Detection

• Left/Right Min/Max: Sets the range for the pivot lookback scan to determine swing points.
• Minimum swing %: Filters out minor price fluctuations after the aggregation loop to focus on meaningful swings.

Loop Filters

• Loop min % change: Gating criteria within the loop; a pivot only counts if the move relative to the previous opposite swing exceeds this percentage.

Rule Engine Tolerances

• Fibonacci tolerance: Defines the allowed deviation (±%) when checking if a wave hits specific Fibonacci levels.
• Proportion Max (Time/Price): Limits how much waves of the same degree can differ in duration or price distance.
• Min guideline passes: Sets the threshold (0–7) for how many guidelines must pass for a motive to be considered valid.

Signal Probability

• Min loop consensus: The required percentage of loop iterations that must agree on a pivot to trigger a signal.
• Require alignment: When enabled, Small and Large wave directions must match to fire a label.

FAQ

Why is a pattern labeled as a Diagonal instead of an Impulse?

A Diagonal is identified when the standard motive rules 1 and 2 pass, but Wave 4 overlaps the price territory of Wave 1 (Rule 3).

How do I access Elliott Wave Rule Engine?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

Why do labels sometimes appear a few bars after a pivot?

The indicator uses standard pivot confirmation which requires a certain number of "Right" bars to confirm a high or low. This ensures the labels are stable and do not repaint once the confirmation period is met.