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Chapter 16, Part II. Major EW patterns – Impulse move. Page 2

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Wave 2

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    After initial move up, when price has risen, some people start to think that maybe the currency is overvalued and decide to take profit. This leads to some pullback, which is wave 2. But price does not reach the low of wave 1, because the currency again becomes attractive for buyers somewhere around the low of wave 2. The major thought here is wave 2 is not an entry of a huge amount of sellers, but an exit of “fast traders”, who have bought during Wave 1 but for some reasons decided to take profit. So, other participants just absorb sells of those. Otherwise it should lead to a move below the low of wave 1.

    Second Wave’s low/high could not be lower than first wave low/high on bull/bear trend!

    Wave 3

    This wave usually the strongest and longest among 1st, 3rd and 5th waves. Because initial swing up and shallow retracement tells that there is some upside power and energy in this currency, since price couldn’t return back to the low of wave 1. This moment attract the attention of the public and other large participants who have not entered on wave 1 and wait for retracement (read wave 2) to step in. Almost as we did – “buy deeps”, remember? Since the mass public and other participants are stepping and stepping in, this leads to strong and sustainable move up. As a rule wave 3 exceeds the highs of wave 1.

    Third Wave could not be smallest trending sub-wave!

    [​IMG]

     
    #1 Sive Morten, Dec 21, 2013
    Lasted edited by : Apr 10, 2016
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