Chartered Market Technician (CMT) Practice Exam

In Elliott wave theory, impulse and diagonal waves are classified as motive waves. Motive waves are essential components of market movement that trend in the direction of the larger trend. Impulse waves are the most common type of motive wave, consisting of five smaller waves that move in the same direction as the overall trend. Diagonal waves also serve as motive waves but feature a different structure, typically occurring in the early stages of new trends or late in existing trends, and can be either contracting or expanding. Understanding that impulse and diagonal waves contribute to the development of larger market trends helps traders recognize potential price movements. By identifying these structures, traders can anticipate future price actions aligning with the dominant market trend. Recognizing that corrective waves, which serve to retrace portions of impulse waves, differ fundamentally from motive waves aids in distinguishing between the various market patterns within Elliott wave analysis.