According to the Elliott Wave Theory, a complete market cycle is composed of eight waves, including five waves in the direction of the trend and three waves against. The upward waves within a bull move are called impulse waves, and the three countertrend waves are called corrective waves.
Corrective waves follow certain rules: the second wave can never retrace more than 100% of the first wave; the third wave is never the shortest in an impulse sequence, and often the longest; and the fourth wave can never enter into the price range of the first wave.

Extensions
In any five-wave sequence, a tendency exists for one of the three impulse subwaves to extend in an elongated movement, usually with internal subdivisions, which can sometimes have nearly the same amplitude and duration as the larger waves. Extensions can provide a useful guide to the length of future waves.

Failures
Failures occur when the extreme in the fifth wave fails to exceed the extreme in the third. This signals a weakness in the underlying trend, and a sharp reversal usually follows.