What Is an Impulse Wave Pattern? (From Investopedia)
An Impulse wave pattern is a strong move in a security’s price coinciding with the main direction of the dominant trend. Impulse waves can refer to upward movements in uptrends or downward movements in downtrends. Impulse term is used frequently by adherents of Elliott Wave theory, a method for analyzing and predicting price movements in the financial markets.
Impulse waves always run in the same direction as the trend but at a one-larger degree. These impulse waves are shown in the illustration below as wave 1, wave 3, and wave 5, while wave 2 and wave 4 are Corrective waves against the dominant trend. Wave 5, while collectively waves 1, 2, 3, 4, and 5 form a five-wave impulse at a one-larger degree.
In Sailing, the wind direction would be called the Impulse wave, while tacking into the wind is a Corrective Wave. This is important as many professional traders only trade “With the Wind” (up or down) after determining that the trend is Impulsive. And Corrective waves are avoided, as they can be quick or even sideways.
SWING TRADING (SHORT TERM)
Watchlist and Charts
Watch List Watch List Charts
Current Positions Current Charts
Closed Results Trading Dashboard
TOP PICK OF THE WEEK
Current Pick and Chart
Top Pick of the Week Featured Stock Chart