The systems — what each one catches and how it trades
All of them come from the same Elliott Wave counting engine (the textbook impulse rules, applied automatically), but they trade different situations. System 1 is the early heads-up, System 2 is the workhorse, System 3 is the rare high-quality bonus, System 4 rides the fifth wave instead of fading it — and Wave 4 fresh is the raw watch list everything feeds on.
System 1 — Wave-4 Dip early heads-up · watch list
In a healthy uptrend, the pullback (wave 4) holds between the 38% and 62% retracement of wave 3 with light volume — the trend is intact and wave 5 should follow. Buy the dip.
How the setup is built
- Wave 4 just ended or is forming — retrace between 38% and 62% of wave 3 (textbook depth, not too shallow, not too deep).
- Quiet pullback — pullback index > 35: the dip was light and orderly, not a route-out.
- Oscillator to zero — the pullback drained momentum without breaking it.
The trade plan
Entry limit at the 38% retracement level
Stop at the 62% level
Target wave-1 length projected from the wave-4 end
Example — GME (Oct 19 2026): hourly sequence 23.22 → 25.77 → 24.04 → 28.30, then a pullback to 26.15 — a 50.5% retrace of wave 3 with pullback index 90 (very light selling). The chart labels wave 4 at 26.15 and shows "wave 5 forming". A Type-1 buy would sit near 26.15 with a stop under 24.04 and a target near 30.8.
Honest note: System 1 is the hardest of the three to backtest honestly (the limit entry happens during the pullback, before the wave-4 end is confirmed), so its statistics are not validated like S2/S3. Treat System 1 rows as an early watch list — the wave-5 that follows often becomes a System 2 or System 3 signal later, which is exactly why it's on the board.
Full breakdown, exact parameters & live signals →
System 2 — Wave-5 Exhaustion core system · most signals
The trend made its final push and died. You fade the last wave: sell a topping rally, buy a flushing decline.
How the setup is built
- Valid 5-wave count — price completed a five-push impulse (up or down) on the hourly chart.
- Near target — wave 5 reached or passed its projected objective (wave-1 length measured from the wave-4 end).
- Momentum divergence — price made a new extreme but the Elliott Oscillator made a weaker one, and pulled back to zero. The fuel gauge reads empty.
- The trigger — price crosses back over the DMA(10,3) line (10-hour average drawn 3 bars late). This is the actual buy/sell signal — the first three just say "get ready".
The trade plan (every signal ships with one)
Entry at the DMA cross (market)
Stop just beyond the wave-5 extreme
Target ±4% from entry
Clock exit after 20 hours if neither hit
Quality score (Q) — why only some rows are "good"
Each setup gets 0–4 points. The gate Q≥3 is what the backtest validated best:
| Point | Flag | Plain meaning |
|---|
| 1 | ATR% ≥ 0.5 | The stock actually moves — dead stocks can't reach the 4% target inside 20 hours |
| 2 | Beyond projection | Wave 5 overshot its target — exhaustion push, the strongest reversal sign |
| 3 | Big wave 3 (≥10%) | The prior leg was substantial — the sequence is real, not noise |
| 4 | Extended 5th | Wave 5 ≥ wave 1 in length — the push went too far (blow-off) |
Example — live sell (SWKS, Oct 20 2026): up-impulse, wave 3 ended 92.80, wave 4 pullback ended 73.76, wave 5 pushed to 82.32 — beyond its 78.39 projection. Osc divergence ✓, oscillator at zero ✓, DMA(10,3) cross down ✓ → SELL at 80.27, stop 82.32 (above the w5 high), target 77.06 (−4%), 20-hour clock. Q = 4/4, R:R ≈ 1.05. If price takes out 82.32 first, the count extends and the signal is void — that's what the stop is for.
Example — "not ready yet" (KGS, same day): wave 5 down is live at 46.56, already beyond its 47.30 projection, Q = 4/4 — but price is still below the DMA line. The scanner shows it as a ⚡ prep row with the plan pre-computed (buy 47.16 / stop 46.56 / target 49.05) and waits. No cross = no trade. That's the system refusing to catch falling knives — one of the reasons it wins.
Full breakdown, exact parameters & live signals →
System 3 — Fifth-Wave Failure rare · double top / double bottom
Wave 5 can't even make it past wave 3's extreme. You get a clean double top (sell) or double bottom (buy) with the wave structure proving why it should hold.
How the setup is built
- Heavy wave-4 selling — the wave-4 pullback was deep on a volume/momentum basis (pullback index < 35: the selling was one-sided, the crowd already left).
- The failure — wave 5 returns to the wave-3 extreme and fails to exceed it: a double top in an uptrend (or double bottom in a downtrend).
- The trigger — DMA(10,3) cross in the reversal direction, same tripwire as System 2.
The trade plan
Entry at the DMA cross
Stop beyond the double extreme (the higher of the two tops)
Target the previous wave-4 extreme (the structure's own objective)
Clock 20 hours
Example — ★ double-bottom buy (schematic): a decline ends its wave 3 at $100 with a violent bounce (pullback index 28 — heavy covering). The next push stalls at $100.50 — it cannot break below $100. Double bottom + failed 5th. DMA crosses up at $96 → BUY 96, stop 101 (above the double extreme), target 88 (the wave-4 low). Risk $5, reward $8, R:R 1.6.
Honest note: out-of-sample, the ★ double-bottom (buy) side is clearly stronger — capitulation flushes that fail to repeat are cleaner than exhausted rallies. The sell side is statistically weak; the scanner marks it "weak (skip)". System 3 fires rarely — roughly a dozen times a year market-wide. It's a bonus, not a daily income.
Full breakdown, exact parameters & live signals →
System 4 — Wave-5 Continuation ride-the-5th system
The opposite bet of System 2: instead of fading wave 5, you ride it. A healthy wave-4 pullback (textbook 38–62% retrace, formed within the last 7 hours) means wave 5 is probably underway — join it in its own direction.
How the setup is built
- Fresh wave 4 — the pullback pivot formed ≤7 hours ago, retraced 38–62% of wave 3, and didn't break wave-1 territory.
- The trigger — price crosses the faster DMA(5,2) line in the wave-5 direction, within those same 7 hours.
- Target — 1.5×ATR(14) from entry (volatility-scaled, not a fixed %).
- Stop — the wave-4 end price: if it gets taken out, the count is broken and you're out.
Out-of-sample (2014–2020, 18,312 signals): 91.8% win, +1.26%/trade, profit factor 10.8, average hold 6.6 hours — with a 20-hour clock as backstop. Both directions work (longs 61.9%/PF 4.1, shorts 58.5%/PF 3.7 on the wider 40-hour variant).
Honest note: this one fires a lot — roughly 2,600 signals a year market-wide, which no one can trade. It's a validated edge, not a filter: the practical use is the System 4 tab — it lists exactly the names where the DMA(5,2) cross has already fired on a fresh wave 4, plan included. And a confession from the lab: I first tested the classic wave-5 "target zone" (60% of the whole wave 1–3 distance, measured from the wave-4 end) — it almost never got hit; the zone is too far for a typical wave 5. The ATR target is what survived the data.
Full breakdown, exact parameters & live signals →
Wave 4 fresh ≤7h raw watch list
Every stock whose wave-4 pivot formed within the last 7 hourly bars — wave 5 is in its infancy. No quality gate at all: this is the earliest, least-filtered view. Most rows never become trades; the ones that matter show "wave 5 favored" (pullback index + oscillator confirm) and graduate into the System 2 prep list. Use it to build your shortlist, not to trade directly.