The start of an impulse movement is usually weaker than the rest of the trend. Assuming bullishness, after the first limited advance, there is a correction followed by a new climb often with a steeper slope. Thus, if a first trend line is drawn between the origin of the movement (time 0) and the bearish correction (time 2) we obtain a straight line whose slope would not adjust to the posterior movement, and which would form a parallel channel from which the price "exits". In the graph we observe the evolution of the German Dax. After the crisis of ´98 at levels slightly lower than the 4,000 points, the Dax recovered in two sections: the first up to the 5500 zone and the second from 5000 to 8000 points. Despite the magnitude of the increase, with gains of 100% the movement shows no sign of impulsive characteristics.

Despite the fact that the price often rebounds on reaching trend line 0-2, , on this occasion not even a minimum rebound occurs. This may be temporary

Movements that lack impulse can also be recognized by other characteristics:

The more gentle slope of a second upward impulse compared to the previous, is usually a sign of weakness in the structure. There are typically three movements instead of impulses which tend to occur in five subsections i.e. the typical layout responds to proportional zigzag movements.

Implications of a non-impulsive structure.

Once clarified that a movement may be impulsive or not, regardless of the length of its route, it can be stated that impulse status has implications, not for the section covered, but for its continuation possibilities. Since the implications of non-impulsive structures are lesser-known than impulsive structures (when treated in depth by general technical analysis), we should focus on the implications of non-impulsive structures.

The main conclusion obtained from the study of non-impulsive structures is that they often give way to the rupture of the trend line and a severe logical correction, given the lack of momentum in the previous movement. Thus, the area that tends to act as a reference is the last section (upward or downward, as appropriate).

Neutral Movements

Something worth mentioning is that a non-impulsive movement, i.e. neutral, means neutral with respect to a previous motion or at least relatively so. What does this mean?

Left: IBM Price Evolution. In approximately 8 years prices rose from levels above $ 10 to $ 140 area. In a few months they fell to $ 90 and then recovered again surpassing $ 130. They fell again, somewhat more, to $ 80 and picked up again, not to record levels but to levels near.

This is a neutral movement after the trend, but it should be noted that the previous trend goes from $ 10 to $ 140, so consolidation levels between $ 90 and $ 140 can be considered neutral. However from $ 140 one third of its market capital is lost, which is not acceptable if buyers maintain their positions. From the simple bullish/bearish or neutral model, opportunities and strategies emerge.

At the moment, with this example, we have found that in a neutral phase (seen as neutral with respect to the previously strong upward trend) the positions are inappropriate for buyers, since the range covered by this movement is very broad.

You might think (and rightly so) that the movement is neutral with respect to the strong previous upward trend, but bearish from a lower time scale point of view. Moreover, this is the key to the identification of technical structures. This is even the key to intra-day dealing and trading as we shall see later. In this sense, it is extremely important to understand that although the long-term investor can ignore short-term evolution (but not modify certain parameters) the opposite is not true.

Intra-day dealing using 5-minute charts should take into account all the time scales in which deals take place, including the extremely long-term.