If a trade relies on Wave 4 staying above Wave 1, place your stop-loss right inside the Wave 1 price territory.

Buy as the price breaks above the swing high of Wave 1.

Trading the financial markets requires a blend of technical analysis, psychology, and risk management. Among the various tools available to traders, the stands out as a unique, pattern-based approach designed to map the "psychology of the crowd."

The final leg of the trend, often accompanied by divergence in indicators like the RSI. 2. The Corrective Phase (3 Waves) Wave A: The first sign of a reversal.

: Five waves that advance in the direction of the main trend.

Impulsive (Motive) Wave – 5 waves in the direction of the trend Wave 1: Initial move Wave 2: Correction of Wave 1 Wave 3: Strongest and longest wave Wave 4: Correction of Wave 3 Wave 5: Final push

: This is typically the longest and strongest wave. Volume surges, fundamental news turns positive, and the broader public joins the trend.

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