Motive Wave Patterns
Motive wave patterns are the wave patterns that share prices use to advance a stock’s share price. That price advancement can be either upwards in a bull market or downwards in a bear market. There are 2 different types of Motive wave patterns that can develop:
- Impulse wave patterns
- Diagonal wave patterns
Both types of Motive wave patterns develop from a sequence of 5 sub-divided waves and also must follow the rules which are listed below. Impulse wave patterns and Diagonal wave patterns follow the same rules, except for one very notable difference – Diagonal wave patterns disregard Rule #9 listed below.
Impulse Wave Pattern
During a bull market, Impulse wave patterns are used to advance the share price in an upwards fashion. During a bear market, Impulse wave patterns help advance the share price in a downwards fashion.
Bullish Impulse Wave Pattern
Bearish Impulse Wave Pattern
When an Impulse wave pattern is moving in the same general direction of the overall market’s trend, there tends to be more momentum behind the Impulse wave pattern. This additional momentum usually results in the development of a wave extension.
Diagonal Wave Pattern
Diagonal wave patterns are the second type of Motive wave pattern. There are 2 types of Diagonal wave patterns, a Leading Diagonal wave pattern and an Ending Diagonal wave pattern. A Leading Diagonal wave pattern is found during the beginning stages of a new uptrend. An Ending Diagonal wave pattern is found during the final stages of an uptrend.
Diagonal Wave Patterns – Bull Market
Other than where the patterns develop in an uptrend or downtrend, a Leading Diagonal wave pattern and an Ending Diagonal wave pattern can look almost identical in appearance. That is why it is important to step back and analyze the trend of one larger degree.
Ask yourself this question, is this pattern at the beginning of a new trend or at the end of a trend? The answer will help you to correctly classify the type of Diagonal wave pattern you’ve identified.
Motive Wave Rules
The following list of rules are very strict in nature. If you find that a potential wave pattern that you are analyzing has broken one of the rules, then most likely the potential wave pattern is not labeled correctly. There are no exceptions to the rules that are listed below.
- An impulse wave always subdivides into five waves
- Wave 1 usually subdivides into an impulse and rarely a diagonal
- Wave 3 always subdivides into a motive wave
- Wave 5 subdivides into an impulse or a diagonal
- Wave 2 subdivides into a zigzag, flat or combination
- Wave 4 always subdivides into a zigzag, flat, triangle or combination
- The bottom of Wave 2 never goes lower than the beginning of Wave 1
- Wave 3 is never the shortest wave
- In an Impulse Wave, Wave 4 never moves beyond the end of Wave 1
- Never are Waves 1, 3 and 5 all extended
