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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.
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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.
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Elliott Wave Theory its most basic tenet is that market movements are based on crowd behavior, which is seen as predictable given similar situations.
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Often, the simple solution is the best one. Find out how easy it can be to trade with the trend.
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Those random movements in the charts actually form patterns. Learn the basics of what these patterns are.
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To "find your game" in technical analysis, you need to be able to recognize reversals and continuations as they form.
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Learn to distinguish between a temporary price change and a long-term trend.
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