Another important aspect of wave theory is the use of price chan­nels. You'll recall that we covered trend channeling in Chapter 4. Elliott used price channels as a method of arriving at price objec­tives and also to help confirm the completion of wave counts. Once an uptrend has been established, an initial trend channel is constructed by drawing a basic up trendline along the bottoms of waves 1 and 2. A parallel channel line is then drawn over the top of wave 1 as shown in Figure 13.23. The entire uptrend will often stay within those two boundaries.
If wave 3 begins to accelerate to the point that it exceeds the upper channel line, the lines have to be redrawn along the top of wave 1 and the bottom of wave 2 as shown in Figure 13.23. The final channel is drawn under the two corrective waves-2 and 4—and usually above the top of wave 3 as shown in Figure 13.24. If wave 3 is unusually strong, or an extended