CMT Elliott Wave Theory

Question 1

Who developed Elliott Wave Theory after studying 75 years of stock market data in the 1930s?

Accepted Answer

Ralph Nelson Elliott

Answer

Ralph Nelson Elliott developed the theory bearing his name in the 1930s after extensive study of historical market data.

Question 2

How many total waves make up one complete Elliott Wave cycle (full impulse plus corrective phase)?

Accepted Answer

8 waves

Answer

A complete Elliott Wave cycle consists of 8 waves: 5 motive impulse waves (1–5) followed by 3 corrective waves (A–B–C).

Question 3

Which inviolable Elliott Wave rule states that Wave 3 can never be the shortest among Waves 1, 3, and 5?

Accepted Answer

Wave 3 length rule

Answer

Elliott's Wave 3 length rule prohibits Wave 3 from being the shortest of the three impulse waves (1, 3, and 5) — it is one of three rules that cannot be violated.

Question 4

According to Elliott Wave rules, Wave 4 must not overlap with which prior wave's price territory?

Accepted Answer

Wave 1

Answer

The non-overlap rule states that Wave 4 cannot enter the price territory of Wave 1, distinguishing a valid impulse from a corrective structure.

Question 5

What Fibonacci ratio is most commonly used to project the length of Wave 3 relative to Wave 1?

Accepted Answer

1.618

Answer

Wave 3 frequently extends to 1.618 times the length of Wave 1, reflecting the golden ratio's prominence in Elliott Wave projections.

CMT - Chartered Market Technician Practice Test

CMT - Chartered Market Technician Practice Test

CMT Elliott Wave Theory