What constitutes a complete Elliott wave cycle?

A complete Elliott wave cycle consists of 8 waves, which are divided into two distinct sections: the impulse waves and the corrective waves. Specifically, the cycle starts with five waves that move in the direction of the trend (these are the impulse waves) followed by three waves that move against the trend (the corrective waves). This structure makes up a full cycle, typically denoted as a larger wave pattern.

The first five waves are labeled as waves 1, 2, 3, 4, and 5, and they represent the major trends within the market. The subsequent three waves are labeled as waves A, B, and C, indicating the corrective phases. Therefore, when considering an entire Elliott wave cycle, the sum of these waves equals eight, which is why the correct answer reflects this complete cycle.

This understanding of the wave structure is crucial for technical analysts who utilize Elliott Wave Theory to forecast future price movements based on historical patterns.