Case Studies:
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Retracement. Wave 2 down
Corrective Wave 2 is always shorter than impulsive wave 1. Wave 2 reacts to a preceding impulsive wave 1. We always measure counter trend wave 2 in terms of ratio of its length to length covered by preceding wave 1. We call such a ratio “retracement ratio”.
Let’s review a simple example:
Wave 1 starts at $10 and completes at $20. Its length is $20 – $10 = $10.
Wave 2 starts at the top of wave 1 at $20 and drops to $15. Its length is $20 – $15 = $5.
Then retracement ratio of that wave 2 will be $5 / $10 = 0.5 or 50%
MAIN FEATURES
- Corrective Wave 2 reacts to preceding Wave 1.
- To predict a target for Wave 2 we should measure length of wave 1 and apply common retracement ratios to the length of wave 1.
- Introduction to Section 8.
- How to measure corrective wave 2 with retracement ratio.
- Wave 2: the most common retracement ratios.
- How to measure corrective wave 4 with retracement ratio.
- Wave 4: the most common retracement ratios.
- How to measure corrective wave B with retracement ratio.
- Wave B: the most common retracement ratios.
- Case Studies: Application of Retracement Ratios.