Impulse
Truncation
When Wave 5 fails to exceed the end of Wave 3. Truncations occur after an extremely powerful Wave 3. The Wave 5 'truncates' — it subdivides into five waves but falls short of making a new high (or low). This signals exceptional weakness (or strength in a bear market).
EXAMPLE
After a massive Wave 3 rally of 500 pips, Wave 5 only manages 20 pips beyond Wave 3, barely making a new high before a major reversal.