Rule
Wave 4 Rule
An absolute rule stating that in an impulse wave, Wave 4 cannot enter the price territory of Wave 1. The low of Wave 4 must remain above the high of Wave 1 in a bull market (and vice versa in a bear market). The only exception is in diagonal patterns.
RELATED TERMS
Wave 4
The second corrective wave within an impulse sequence. Wave 4 never overlaps wit...
Wave 1
The first impulse wave in a five-wave sequence. Wave 1 is often the hardest to i...
Diagonal
A motive pattern with overlapping waves that forms a wedge shape. Leading diagon...
Invalidation Level
The price level at which a wave count is proven wrong. For example, if a Wave 4 ...