Practical Application

Wave degrees, labeling, Fibonacci targets and the Box Method for trading geometry and elliott wave analysis.

Overview

This chapter translates Elliott Wave Theory into a daily workflow you can use on charts. Focus is on wave degrees, label hygiene, Fibonacci target setting, and the geometric Box Method to keep labels objective and consistent when performing elliott wave analysis.

Wave Degrees & Labeling

Markets are fractal. Always pick a primary degree for your analysis (the degree you'll trade from) and check one degree higher and one degree lower for context. Use consistent notation to avoid confusion (Primary, Intermediate, Minor, etc.).

  • Pick your degree: label the major swings on that degree first.
  • Confirm internals: ensure subwaves are 5 or 3 where appropriate before finalizing labels.
  • Document alternates: keep a simple alternate count in your notes for edge cases.
Wave degree nesting

Fibonacci Targets & Projections

Fibonacci ratios are a tool for estimating likely wave endpoints. Use them for target projection, not as the sole confirmation. Combine ratios with internal wave structure and momentum clues.

  • Wave 3 common target = 1.41–1.618 × Wave 1
  • Wave 5 may equal Wave 1 (1.0) or extend (1.618)
  • Use 0.382/0.5/0.618 for retracement zones on corrections (Wave 2 / Wave B)
Fibonacci projection

Geometric Box Method

The Box Method is a visual way to compare proportion in price and time. Draw a box around a completed wave and duplicate it forward to compare the behaviour of subsequent waves. This is central to trading geometry and consistent elliott wave analysis.

  1. Draw box around Wave 1 (price height & time width).
  2. Duplicate for Wave 3 & Wave 5 to check equality/extension.
  3. Use boxes on corrections (Wave 2 vs Wave 4) to test alternation.

Practical Chart Workflow

Use this checklist every time you label a chart:

  1. Zoom out and choose dominant trend (one degree up).
  2. Mark major pivots (1–2–3–4–5 or A–B–C).
  3. Verify the three rules (no invalidation).
  4. Check internal structure (5 vs 3 subdivisions).
  5. Apply Fibonacci projections for targets.
  6. Confirm momentum (RSI/MACD) for divergence on Wave 5 or C.
  7. Use box method to confirm proportion & alternation.

🔑 Key Takeaways

  • Label one primary degree and verify one degree up/down.
  • Fibonacci projections are for target estimation — internal structure first.
  • Box Method trains proportional judgment and reduces bias.
  • Always document alternate counts and invalidation rules.