Forget most of what you know about wave theory.
A daytime job is perfect to be able to dedicate enough brain cells to figuring out how things work.
Read the following:
Now, please show wave 1 on the following image:
The red tail was an exhaustion terminal tail. If your drawing is any different from the following, then you probably suffer from the handicapp of E.W. wanting to call everything that happens on the chart a wave.
The part between the red tail and the starting, full charge doji was merely fluctuation in the downward channel (which was parellel with the Green River).
Wave 2 was easy enough, it recharged the energy by making a cross back down through MR. Maroon. The only thing noteworthy about wave 2 is that it took out its own high point while pushing lower.
Wave 3 would show an exhaustion, and this would be new to you, but most terminal moves end in the zone between 45-41.
I would put wave 3 like that. Again, not touching wave 2 and not ending at the high point, but rather the exhaustion point.
Funny? It gets funnier. One of the returning features of a wave 4 is the beat of the ending point of wave 3.
Wave 4 recharged the energy again, and ended shy of the wick – which by the way would not exist according to E.W. for “wave 1 and wave 4 cannot overlap”. The heck they can’t.
So there you have it, wave 4 in red down and wave 5 in blue with the highlighted exhaustion tail, that took 2 hours to develop this time.
(from the notes of Wave 5)
One question that might be shaping in your head if you have been a reader of mine, is if this was a mean reversion.
The numbers on the Stochastic Bars DD were missed by 1-pip on the downside and 1-pip on the upside.
The horizontal line of course was the last Peak Trending Exhaustion.
It is a back test for sure. Was this a reset? What do you think?
On the following image you can see the starting points of the 3 pushes: the high consolidation-level areas.
The 1st push came from an out-of-oversold condition. The direction was up from the red tail earlier.