Impulse Wave Pattern

AAA

DEFINITION of 'Impulse Wave Pattern'

A term used in the Elliott wave theory to describe the strong move in a stock's price coinciding with the main direction of the underlying trend. These impulse waves are shown in the illustration below as wave 1, wave 3 and wave 5. Impulse waves also refer to the strong downward movements in a downtrend.

Impulse Wave Pattern

INVESTOPEDIA EXPLAINS 'Impulse Wave Pattern'

The interesting thing about the Elliott wave theory is that it is not limited to a certain time period. This allows some waves to last for several hours, several years or even decades. Regardless of the time frame used, impulse waves always run in the same direction as the primary trend.

RELATED TERMS
  1. Cup and Handle

    A pattern on bar charts resembling a cup with a handle. The cup ...
  2. Rally

    A period of sustained increases in the prices of stocks, bonds ...
  3. Trend

    The general direction of a market or of the price of an asset. ...
  4. Correction

    A reverse movement, usually negative, of at least 10% in a stock, ...
  5. Head And Shoulders Pattern

    A technical analysis term used to describe a chart formation ...
  6. Elliott Wave Theory

    Theory named after Ralph Nelson Elliott, who concluded that the ...
RELATED FAQS
  1. Why are corrective waves useful for technical analysis?

    Corrective waves play a central role in the Elliott wave theory, a much-debated stock market trading system that operates ... Read Full Answer >>
  2. What's a good forex strategy to use when spotting a Wedge-shaped Pattern?

    Use wedge-shaped patterns to identify bullish or bearish price action when trading currencies in the foreign exchange (forex) ... Read Full Answer >>
  3. How do I perform a financial analysis using Excel?

    Investors can use Excel to run technical calculations or produce fundamental accounting ratios. Corporations use Excel to ... Read Full Answer >>
  4. How do I use Trade Volume Index (TVI) to create a forex trading strategy?

    The trade volume index (TVI) indicates whether a security is being accumulated or distributed and is calculated using intraday ... Read Full Answer >>
  5. Why is the Trade Volume Index (TVI) important for traders and analysts?

    The trade volume index (TVI) is important for traders and analysts because it indicates whether an asset is being accumulated ... Read Full Answer >>
  6. What is the Trade Volume Index (TVI) formula and how is it calculated?

    The trade volume index (TVI) measures the amount of money flowing in and out of a security or the market. The TVI depends ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Retracement Or Reversal: Know The Difference

    Learn to distinguish between a temporary price change and a long-term trend.
  2. Charts & Patterns

    Continuation Patterns: An Introduction

    Those random movements in the charts actually form patterns. Learn the basics of what these patterns are.
  3. Trading Strategies

    Introduction To Technical Analysis Price Patterns

    To "find your game" in technical analysis, you need to be able to recognize reversals and continuations as they form.
  4. Forex Education

    Keep It Simple - Trade With The Trend

    Often, the simple solution is the best one. Find out how easy it can be to trade with the trend.
  5. Technical Indicators

    Will These High-Flying Stocks Stay Hot in 2015?

    These 10 stocks were on fire in 2014. Will they stay hot?
  6. Chart Advisor

    These REITs Are Looking Good Right Now

    These REITs are in strong uptrends and looking to go higher.
  7. Chart Advisor

    Commodity Traders are Watching These 3 Charts

    As we head towards the summer months, many commodity traders are looking to diversify their holdings and to protect themselves against inflation.
  8. Trading Strategies

    Analyzing The Market With Trend Mirrors

    Past price action can exert a powerful influence on current rallies and selloffs.
  9. Technical Indicators

    Reading Trends With Moving Average Ribbons

    Moving average ribbons reveal subtle relationships between price, time and trend.
  10. Chart Advisor

    The Stock Market's Uptrend Is Set To Continue

    The most common debate amongst traders is when the prolonged uptrend across the financial markets will come to an end.

You May Also Like

Hot Definitions
  1. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  2. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  5. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  6. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
Trading Center