Elliott Wave Analysis Plan: From Count to Confirmation, Invalidation and Targets
Turn a wave count into a written, testable plan before price moves
A valid wave count identifies a pattern. An Elliott Wave analysis plan writes down what would confirm it, where it would be invalid, which target zone it would favour and what the alternate count is. This guide walks through all four, linking to the pattern guides already published on this site.
From Wave Count to Elliott Wave Analysis Plan: Why a Count Alone Isn't Enough
A wave count is an opinion about market structure. An analysis plan writes that opinion down in a form price can test: the level that would confirm the count, the level where the count is invalid, the Fibonacci target zone the count would favour next, and the alternate count that takes over if the main count fails. Writing all four down before price moves turns a count from a feeling into something you can check, review and learn from, whichever way the market goes.
The principle behind every step comes from Ralph Nelson Elliott's work in the 1930s; the Elliott wave principle entry gives its history and the original wave degrees.
Step 1: Confirmation From a Pattern-Specific Level
Confirmation comes from the pattern you have identified, not from a generic rule. Each pattern guide on this site shows the price behaviour that confirms that structure: for example, a break beyond the end of wave A once a zigzag's wave C is under way, or a break of the b to d trendline once a triangle's wave e looks complete. Define confirmation as a specific price condition before it happens, so you can tell afterwards whether the market actually agreed with the count.
| Pattern | Where to See Confirmation in Practice |
|---|---|
| Impulse Wave | Applying it in analysis → |
| Zigzag | Applying it in analysis → |
| Flat Correction | Applying it in analysis → |
| Triangle | Applying it in analysis → |
| WXY & WXYXZ | Applying it in analysis → |
Step 2: The Level Where the Count Is Invalid
The invalidation level comes straight from the rule your count depends on. If you are counting a wave 3 in progress, the count is invalid below the start of wave 1, because wave 2 can never retrace beyond the origin of wave 1. If you are counting a wave 4, the count is invalid if price overlaps the end of wave 1 in a standard impulse. Unlike an arbitrary line on a chart, a rule-based invalidation level only breaks when the structure you described has actually failed.
The price levels that invalidate a count are the same violations covered in the Common Rule Violations section of the Rules & Guidelines guide. That section is the fastest way to confirm exactly where the count you are working with is no longer valid.
Step 3: Fibonacci Target Zones, Nearer Edge First
Targets are zones, not single prices. Take the typical Fibonacci relationships for the wave you expect next, such as wave 5 relative to wave 1, or wave C relative to wave A, and project them from the relevant pivot. Where two or more relationships cluster, you have a target zone. Write the nearer edge of the zone first, because it is the level price reaches first and the one that tells you earliest whether the count is behaving as expected.
| Pattern | Typical Fibonacci Relationships |
|---|---|
| Impulse Wave | Fibonacci targets → |
| Zigzag | Fibonacci targets → |
| Flat Correction | Fibonacci targets → |
| Triangle | Fibonacci targets → |
| WXY & WXYXZ | Fibonacci targets → |
Step 4: The Alternate Count and the Level Where You Switch
The alternate count is your best answer to the question "what is the market doing if my main count is wrong?" It should be a valid count in its own right, built from the same rules, and it should come with a specific switch level, usually the main count's invalidation level. Naming the alternate in advance means that when the main count fails, you already know what you would favour next instead of rebuilding the chart from scratch under pressure.
Putting It Together: A Worked Elliott Wave Analysis Plan
A complete plan states, before price moves: the pattern identified and how far through it the market is, the confirmation level, the level where the count is invalid, the Fibonacci target zone with its nearer edge first, and the alternate count with its switch level. Writing all five down in advance, rather than explaining the chart after the fact, is what makes the analysis testable.
Illustration only. The figures below are round numbers chosen to show the method on gold. They are not a current or historical count.
| 1. Pattern | Minute wave ((iv)) contracting triangle after wave ((iii)) peaked at 2,400. Wave ((i)) ended at 2,250. Sub-waves: (a) 2,300, (b) 2,385, (c) 2,320, (d) 2,370, (e) looks complete at 2,340. |
| 2. Confirmation | A break above the (b) to (d) trendline, near 2,360, would confirm the triangle is complete and wave ((v)) has started. |
| 3. Count invalid below | 2,320, the end of wave (c). In a contracting triangle, wave (e) cannot move beyond the end of wave (c). |
| 4. Target | 2,445 to 2,495. The nearer edge is the triangle's widest part (85) added to the 2,360 break. The far edge is wave ((v)) at 0.618 of wave ((i)) from 2,340. |
| 5. Alternate count | Below 2,320 the count would favour wave ((iv)) extending as a combination, with the 38.2% retracement of wave ((iii)) as the next zone. Below 2,250 wave ((iv)) would overlap wave ((i)) and the impulse count itself is invalid. |