Elliott Wave 4 Rules

Elliott Wave (4) cannot retrace into the area of Wave (1)

If Wave 4 retraces into the area of Wave 1, then it cannot be considered a Wave 4, and the current wave structure must be reconsidered.

Here Wave 4 has retraced back below the high of Wave 1, which would be in breach of the third rule, so this wave count is incorrect and must be re-considered.

Note: In real life this “Rule” can be breached slightly, please see here