Price levels, breakouts and retests in an Elliott wave hypothesis
Support and resistance zones, a closing breakout rule, failed breakouts and retests in separate invented cases.
Published: (UTC+3)
Русский · English · Deutsch · Español · Français · Italiano · 繁體中文 · 日本語 · 한국어
A price level describes an observation area; a wave count proposes movement structure. Separate fictional cases show what is already observable and which conclusions still require evidence.
Freeze the zones first
Support names an area considered for a slowing decline or possible bounce; resistance names an area considered for a pause in an advance. These are testable interpretations, not walls that must hold. In this exercise, reference prices 110/109.9 and 100/100.1 are selected beforehand, then R=[109.8,110.2] and S=[99.8,100.2] are fixed. Each width 0.4 is our example convention, not a universal tolerance.
Save the source, interval, completed-bar cutoff and zone-selection time before the next observation. Record the proposed wave role and its structural invalidation separately: a zone edge is not automatically a wave boundary. A possible change from resistance to support remains a hypothesis to examine rather than a promised bounce.
| Item | Calculation or value |
|---|---|
| R | [109.8,110.2] |
| S | [99.8,100.2] |
| P_R | 110 /109.9 |
| P_S | 100 /100.1 |
Does touching S establish the end of wave two?
No. It establishes only price relative to the selected zone. Internal structure and the condition for that particular second-wave hypothesis need separate checks.
Choose an exact breakout condition
For a separate experiment, require a completed close C>110.2. Bar 5 with O109.6,H111,L109.3,C110.6 meets it. High 111 alone without the required close would not pass; C=110.2 is not greater than 110.2 either. This is our event-recording rule, not a mandatory breakout definition for every market.
The condition becomes available after bar 5 finishes. It does not establish a purchase, an available fill price or a confirmed third wave. Keep separate observation, wave-hypothesis and possible execution records. A different interval or rule is a separate experiment; subsequent direction remains unknown at this cutoff.
| Item | Calculation or value |
|---|---|
| O/H/L/C | 109.6/111/109.3/110.6 |
| Rule | C>110.2 |
| C5 | 110.6>110.2 |
Bar 5 passes. Can a filled purchase be recorded?
No. Close 110.6 establishes only C>110.2. The example supplies no submitted order, execution price or fill evidence.
A failed breakout needs a later test
In another independent case, bar 5 closes 110.6. Beforehand, define a return as a completed close below 109.8 within the next two completed bars. Bar 6 gives C109.6<109.8, satisfying that return test on the first of the two bars. Its other OHLC values are not supplied.
Here, “false breakout” refers to this finite test, not a universal shape or future knowledge at bar 5. Distinguish it from a wick outside the zone without an initial qualifying close. Preserve the original event and later return rather than widening the zone after the outcome. Neither the return nor its name determines a unique alternative Elliott count.
| Item | Calculation or value |
|---|---|
| C5 | 110.6>110.2 |
| C6 | 109.6<109.8 |
| Δt | 1≤2 |
Was bar 6’s result knowable at bar 5’s close?
No. Bar 5 supplied the recorded breakout condition. The return test became available only after bar 6 completed.
A retest is a separate post-break observation
In a third independent case, bar 5 closes 110.6 and bar 6 is O110.7,H110.9,L110.1,C110.4. Low 110.1 enters R109.8–110.2 while close 110.4 stays above 110.2. Under this chosen convention, that is an observed retest from above, distinct from a close below 109.8.
Former resistance is now being examined as possible support. Future price is still unknown: the touch and close guarantee neither continuation, reversal nor wave completion. If a later confirming bar is required, define its condition beforehand and do not include it among facts already available. Execution remains a separate question.
| Item | Calculation or value |
|---|---|
| O/H/L/C | 110.7/110.9/110.1/110.4 |
| L6 | 109.8≤110.1≤110.2 |
| C6 | 110.4>110.2 |
Does the bar 6 retest guarantee a rising next bar?
No. The zone touch and close 110.4 are known. A subsequent bar is not yet supplied.
HH/HL and wave structure answer different questions
Consider separate invented turns 100→110→104→113→107→115. Highs 110,113,115 rise and lows 100,104,107 also rise: HH/HL describes the selected swing scale. The swing-selection rule and observation-availability times need their own record; outer points do not reveal internal waves.
Assigning 0–5 of an ordinary upward impulse to those same points makes proposed 4=107 overlap wave 1 territory ending 110. That impulse hypothesis fails while the observed HH/HL description remains. Renaming it a diagonal is not an automatic repair. The adjacent Dow/Elliott article develops the comparison.
| Item | Calculation or value |
|---|---|
| HH | 110<113<115 |
| HL | 104<107 |
| 4 / 1 | 107<110 |
Do rising highs and lows validate this ordinary impulse?
No. They describe the swings, but 4=107 overlaps 1. Another model requires its own evidence.