The first time I heard about the 5th wave extensions of the fifth wave, I wondered what all these were all about because I only knew about the fifth wave extensions. From that point, I began to look into it more to unravel all the hidden tips one can find. I am glad I have done that, and that is why I am writing this article. Let's get started.
Fifth Wave Of 5th Wave
Like other impulse waves, the fifth wave can be subdivided into five minor waves. Therefore, it has its own fifth wave (5th wave of the real 5th wave).
It is the 5th minor wave of the 5th wave. That minor wave is an impulse wave. Therefore, it can also be extended. So, if the fifth wave of the 5th wave is extended, one has the 5th wave extensions of the fifth wave.
Factors Of 5th Wave Extensions Of 5th Wave
The first factor is the strong momentum. A bullish or bearish momentum that has not stalled is more likely to continue. The first sign that a bullish momentum is about to stall is when the common sense trend line is broken. It is then confirmed after the price failed to exhibit a new higher high. The opposite is also true in a down trend.
It is normal that one is prepared for a correction after counting five waves. Nevertheless, it is a mistake to assume that the trend has ended because one has counted five waves. The fifth of the 5th wave can be extended. Please be ready for it if the momentum has not yet stalled.
The fifth itself can be extended (fifth wave extensions) as the fifth minor wave of the fifth wave (fifth wave extensions of the fifth wave)
The second factor of the fifth minor wave of the 5th wave extensions is the market leaders that continue to rise or decline. One is always trading first the market SP 500, but the market's engines are market leaders. A bullish financial instrument that is in the fifth wave can benefit from its market leaders that are still gushing up.
The same thing is possible for the 5th bearish wave stocks that are likely to extend as market leaders continue to decline.
The third factor that causes the fifth wave extensions of the 5th wave is the last lap phenomenon. The fifth minor wave of the fifth is the last minor wave. It is similar to the last lap of F1 race.
It is obvious to many waves traders who often gang to trade it. That ganging activity does create a surge in the trading volume. Consequently, that high demand does send the price to the uncharted territory. That is why the fifth wave of the fifth wave is extended.
The fourth reason why there is an extension of the 5th minor wave of the fifth wave is because of the ignorance of some market players.
They are not stupid, but they just lack the knowledge. Those traders and investors love to sell for other justified reasons at the top of bullish trend. So when they are busy doing that, and wave traders spot that the fifth minor wave is being extended, one can rest assured that the 5th minor wave of the 5th wave is more likely to be extended.
The lack of knowledge about how to forecast the markets using the Elliott principle can really put an ordinary investor into a big trouble. It is happening all the time already, but some do not even know. I feel sorry for those, but I am also trying my bit to help them like other Elliott teachers.
The fifth factor that can lead to the fifth wave extensions of the 5th wave is the economic news. A high impact bullish news at the top of the fifth wave can cause the fifth wave extensions that will ultimately generate the 5th wave extensions of the 5th wave.
That news can relate either to the financial instrument, sector or market leaders. It may also be a very bullish monetary policy from a central bank or the Federal reserve.
One must constantly check the economic news that relates to the financial instruments that one is trading. Take it from me, the economic news are regularly causing Elliott wave extensions. Waves traders can no longer ignore them.
I think I have covered in depth this topic. I will surely update the article if there is a need for it. I will also be posting videos in due course to demonstrate the fifth wave extensions of the 5th wave. That is it.
The fifth wave extensions of the fifth wave do happen when many are not expecting them. Apart from the factors that I have already touched upon, please note also that the late comers and contrarian market participants do add to the fuel.
It is easy to trade to the 5th wave extensions of the 5th wave if one knows how to count waves. It is a phenomenon that really makes a wave trader really proud as many ordinary investors are leaking their wounds.
Well, it is not too late to learn to master the Elliott wave principle. Please join us for free at 24Elliottwaves YouTube channel and website to get started.
Please do not hesitate to post questions and comments at 24Elliottwaves YouTube channel, and in due course I may record a video or answer you.
I have always enjoyed writing these types of articles. I hope it has made you proud to be an Elliott wave trader. If that is the case, please share and bookmark it. That means a lot to me.
Thank you for reading. Please stay tuned because it will not be too long before I post another wave trading article that wakes you up a bit more as an intelligent wave trader.
I wish you the very best. Happy Wave Trading To All
This article is written by George Beaulieu founder of 24Elliottwaves.com website.