Let's talk about the fourth wave extensions. I know that many will be scratching their head and wondering where I got that one from. Alright, I get it. Please stay with me as I begin to shed more light onto the fourth wave extensions. Let's get started.
First Thing About 4th Wave Extensions
The first thing one should retain from the 4th Elliott wave extensions is that, it is completely different from the normal wave extensions.
Normally, the only waves that are extended are 1st, 3rd, 5th and impulse waves. One is generally talking of those extensions when one refers to wave extensions. Please do not confound the normal wave extensions with the 4th wave extensions.
Why Am I Writing About 4th Elliott Wave Extensions?
I am writing about the 4th wave extensions to draw wave traders attention to it. They are happening frequently, and one ought to understand those extensions.
I am writing about it because it is not only the fourth wave that extend. In fact most of the corrections after a trend do extend.
I am writing about the 4th wave correction because a corrective wave has its own impulse waves. They are not impulse waves in the proper sense of the word, but they are "motive" because they are directional. I will not dwell on that because I have already explained it other articles.
Consequently, corrective waves such as flat, zigzag and even ABCDE corrective waves can be "extended". Please do not mash up your computer because what I am discussing today. Please hang around a bit more, and I will explain everything.
I am writing this article because WXY, double or triple zigzag corrective waves are extended corrective waves. I am writing about the 4th wave extensions because though the Elliott wave traders are dealing with them on regular basis they do not fully understand why and how a corrective wave can be extended.
So, those are really the reasons why I begin to write about it.
How Does A Corrective Wave Extend?
A Corrective wave extends in height and width.
They can extend in height like a normal impulse wave because of the extension of their own "motive waves". One of the corrective waves that regularly extends in height is the zigzag pattern. The second one after the zigzag is the flat correction.
Do not worry because once we resume posting videos at 24Elliottwaves YouTube channel, I will be explaining everything I have been writing about.
Contrary to the normal extensions, the fourth Elliott wave does frequently extend in width. ABCDE and WXY patterns are the waves that often extend in width (on the time scale).
Really, the expansion in width relates to the increase of a corrective wave structures' width or extension on the time scale. A complex correction is often extended on the time scale. A correction that is extended on the time scale can sometimes takes more than seven years.
It seemed like a never ending correction. The corrective is extended in height or depth (bearish) when the correction continues until the price reaches the vicinity of zero. In that instance, the price is dropping bit by bit, and if it rallies a bit, it just continues to drip more and more like in a bottomless pit.
No worries guys, I will be compiling a list of charts that illustrate
what I sharing today in the near future. Thank you for your patience.
Typical Fourth Wave Extensions
A typical 4th Elliott wave extension is the prolongation of the ABCDE corrective wave.
Indeed, after the E minor wave, the price continues to oscillate more. That is also an extension on the time scale and width. Zigzag and flat corrections do not often take place in the 4th wave.
However, a fourth wave of a higher degree could be WXY, Zigzag, double or triple zigzag or flat correction.
Those complex corrections are 4th Elliott wave extensions. A wave trader may be looking at a complex corrective phase on the monthly chart without knowing that he or she is dealing with a fourth wave of a higher degree.
Truly, most 4th waves of a higher degree that go beyond the daily chart do extend either in width or height. Anytime one is dealing with a complex corrective wave, one may check what it equals to on the next higher degree. The fourth wave is a shallow corrective wave, but higher degree 4th waves can extend in height or depth and width because they belong to a wider Elliott wave cycle.
Extensions Of Corrections Or Corrective Phase
A normal correction after a bullish or bearish trend is often extended in both width and height (or depth).
One of the reasons why those corrections do extend is because of the fundamentals or global economic downturn. What is taking place is that after a bullish corrective wave pattern is completed, people start to buy but instead of a trend it can be an X wave or impulse wave because the fundamentals are still weak.
Therefore, the correction rolls on until one day both fundamentals and market sentiment improve. Sometimes, after an initial corrective wave, a new healthy trend starts, but due to the money outflow from that sector, the trend can just fizzle out. As you can see a normal correction does extend more often.
Sharp Correction Extensions
A sharp correction will not be sharp if it is not extended.
All sharp corrections are extended. One can not see the internal waves because it is a sharp price-action. The move is fast and deep in a short time. One is dealing with an rapid extension in height or depth of a correction.
Indeed, it is easier for a trader to agree that a sharp correction is an extended price action within a short time than to accept that a corrective wave does extend too.
A normal motive wave (trend) has three impulse waves and two corrective waves. An impulse wave or motive does extend. Similarly, common corrective waves have two minor "motive waves" and one minor corrective wave. A and C minor waves are "impulse waves" and B minor wave is a corrective wave for the zigzag but a flat correction's A and B minor waves are corrective (double retracement) while the C minor wave is impulsive. That is why the internal structure of flat correction is (3, 3, 5). Right? Yes, it is.
To understand quickly what I have just stated, note that the number 5 refers to impulse while 3 points to a correction.
Will you now agree with me for the first time in your life that corrective waves have their own kind of "impulse" (5) and corrective (3) waves? I hope we have cleared all our misunderstandings on that matter for good.
The internal structure of the zigzag pattern is (5, 3, 5), so it is fair to say that it has two "impulse" (5) and one corrective wave. Those who want to understand more will surely increase their knowledge.
The ABCDE has five minor corrective waves and no impulsive wave because its structure (3, 3, 3, 3, 3).
Evidently, it does not matter whether it a normal impulse wave (motive) or not, an impulse wave (5) whatever it is its nature can be extended.
A and C zigzag's minor waves can be extended like the flat correction's C minor wave.
I hope, I have managed to increase traders' awareness about the 4th wave extensions.
If yes, then I am a happy wave teacher. The corrective wave extensions do play a major part in a precise market timing and forecast. I hope this article will help others to sharpen their market forecast strategies and most importantly help many to understand how to make the best use of an Elliott forecast.
The extension of the 4th wave is usually an extension on the time scale during ABCD correction. The 4th wave extensions of a higher degree can be wide or deep on time frames higher or equal to the monthly chart.
In my opinion, one that understands more the corrective waves and their extensions will more likely know when a complex correction is about to end. As always, one must combine the fundamentals and waves analysis to buy the best stocks that are ready to rise. That is the best approach.
Thank you for reading this article. I hope it will be useful to you. If that is true, then please share and bookmark it. I will really appreciate it.