The 4th wave of an impulse tends to correct into the price range of the previous wave’s 4th sub-wave. Retracement guidelines also apply to other corrective waves.
Description
A key guideline states that the 4th wave of an impulse tends to find support or resistance within the price range of the 4th sub-wave of the preceding 3rd wave — called the ‘previous 4th wave’ zone. Additional retracement guidelines apply to other wave types.
Key Points
- Wave 4 correction target: the price range of the 4th sub-wave of wave 3 (the ‘previous 4th wave’ zone)
- Wave 2 retracement target: 61.8% or 50% of wave 1
- Wave 4 retracement target: 38.2% of wave 3
- Zigzag C wave target: 0.618×, 1.0×, or 1.618× wave A
- Expanded flat B wave target: 1.236× or 1.382× wave A
- Expanded flat C wave target: 1.618× or 2.618× wave A
- Triangle sub-waves: C ≈ 0.618× A; D ≈ 0.618× B; E ≈ 0.618× C
