Elliott Wave Principle
Currencies & Commodities
Elliott noted that parallel trend channels typically mark the upper and lower boundaries of impulse waves, often with dramatic precision. The analyst should draw them in advance to assist in determining wave targets and provide clues to the future development of trends.
The initial channeling technique for an impulse requires at least three reference points. When wave three ends, connect the points labeled "1" and "3," then draw a parallel line touching the point labeled "2," as shown in Figure 2-8. This construction provides an estimated boundary for wave four. (In most cases, third waves travel far enough that the starting point is excluded from the final channel's touch points.)
Figure 2-11 Figure 2-12