Fourth wave retrace

ES 06-16 (10 Min) 4_15_2016


Here is an example of the ABC relationship in a fourth wave retracement. If you measure the first wave down—A wave (you can tell the first wave by the B wave that retraces it about 62%), then you can pretty much count on the fact that the C wave will move down to the 1.618 level before turning back up into the fifth wave.

The same relationship occurs in second waves.

If it breaks the 1.618 level, it will most likely extend to the 2.618 level.

This is why I check it by also measuring the larger wave to that point, because a fourth wave retraces normally 38% of the length of 1,2,3 combined, while the second wave retraces 62% of the first wave.

If the points of both measurements coincide, it confirms the likelihood of the wave turning back up at that point.