1
Q
5 and 3 wave names
A
- Impulse, motive or actionary
- Corrective, reactionary
2
Q
When 3 is longest…
A
5 will approximate 1
- When 3 is 161.8 or more of wave 1 good guideline
3
Q
Alternation
A
- If wave 2 is sideways, 4 will be sharp
- If wave 2 is sharp, 4 will be sideways
4
Q
Corrections
A
Usually end in the area of wave 4 of a lesser degree
5
Q
Wave 1
A
- Half are basing patterns
- Heavily corrected by Wave 2
- Lots of short-selling
6
Q
Wave 2
A
- Erodes much of Wave 1
- The Bear is Back (Market Psychology)
- Low volume
7
Q
Wave 3
A
- Favorable fundamentals
- Holds the key to personality of the move
8
Q
Wave 4
A
- Inverse to wave 2 (sharp vs. flat
- More often sideways
- lagging stocks top
9
Q
Wave 5
A
- Loses momentum and breadth
- Psychology is extremely bullish despite bad fundamentals
- Should look like wave 1 if 3 was big.
10
Q
Wave A
A
- Technical breakdowns
- If A is 3 waves = Flat Triangle
- If A is 5 waves - Zig Zag
11
Q
Wave B
A
- Shallow retracements lead to deep wave C’s
12
Q
Wave C
A
- Correlary to wave 3
- Fundamentals collapse
- Phsychology is very bearish and scared.
13
Q
Corrective Forms
A
- ZigZag: Sharp, A is 5 waves, 5-3-5, could be a double if C doesn’t reach objective,
- Flat: Sideways. A is 3 waves, 3-3-5, Regular-Expanded-Running
- Triangle: Sideways, A is 3 waves, 3-3-3-3-3
- Combination:
14
Q
Types of Flats
A
- Regular: A, B, C are fairly even (flag, or range trading)
- Expanded: B moves beyond A’s origin, C moves beyond B’s origin (like a broadening pattern),
- Running: Like expanded but wave C fails to reach A’s start
15
Q
Triangles Characteristics
A
- 3-3-3-3
- Each leg retraces 62% of the prior leg
- Common as wave 4 and B
- E wave often falls short.
16
Q
Volume importance
A
- Correctives end on low volume
- Wave 5 ends on low volume
CMT
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