I want to share a useful tip about Elliott waves that many people often overlook when first learning technical analysis.

Elliott waves are a powerful tool for identifying optimal entry points, but the challenge is counting the waves accurately. Today, I will talk about three golden rules that must not be violated, because if you violate them, you have counted the waves incorrectly.

First, wave 2 never retraces more than 100% of wave 1. This is very important because it helps you distinguish whether wave 2 is valid or not. If wave 2 dips below the starting point of wave 1, you need to review your counting method.

Second, wave 3 is never the shortest among the three impulse waves (1, 3, 5). Wave 3 is usually the strongest wave or at least equal in length to wave 1 or wave 5. If wave 3 is too short compared to the other two, you have definitely miscounted.

Third, wave 4 never enters the price zone of wave 1. In other words, the peak of wave 1 and the trough of wave 4 should not overlap. This is a rule to protect your Elliott wave structure.

I often apply these three principles when analyzing BTC and ETH, which helps me avoid many false signals. Once you master accurate wave counting, choosing the right entry point becomes much easier. Practice counting Elliott waves across different timeframes and you'll notice the difference.