Impulse Wave
An impulse wave is the bread and butter of Elliott Wave analysis. It is a five-wave motive pattern labeled 1-2-3-4-5 that drives price in the direction of the larger trend. Three rules are non-negotiable. Wave 2 never retraces 100% of Wave 1. Wave 3 is never the shortest among Waves 1, 3, and 5. Wave 4 never enters Wave 1 price territory. Break any of these rules and your count is wrong, full stop. Impulse waves carry the energy of the trend. You spot them by looking for a clear five-wave subdivision with strong momentum in Waves 1, 3, and 5, and corrective pullbacks in Waves 2 and 4. They matter because they tell you the market has conviction in one direction.
Say Bitcoin rallies from $20,000 to $25,000 (Wave 1), pulls back to $22,000 (Wave 2), surges to $35,000 (Wave 3), corrects to $30,000 (Wave 4), then pushes to $40,000 (Wave 5). Wave 4 at $30,000 stays above Wave 1's high of $25,000, confirming no overlap. Wave 3 at $10,000 in length is the longest, satisfying all three impulse rules. If Wave 4 had dropped to $24,500, the impulse count would be invalidated.