After a strong 5-wave impulse completes, price enters a corrective ABC pattern. Enter on the completion of wave C (typically 0.618-1.272 of wave A) to catch the resumption of the primary trend.
Indicators Used
Fibonacci RetracementSwing High/Low
Rules
📈 Long after ABC Down
- Identify completed 5-wave bullish impulse
- Wave A: initial pullback from impulse peak
- Wave B: counter-rally, typically 0.382-0.618 of A
- Wave C: final leg down, extends 0.618-1.272 of A
- Enter long at completion of wave C with bullish reversal candle
- Stop: below wave C low
- Target: new high beyond wave 5 peak (minimum)
🚫 Invalidation
- Wave C extends beyond 1.618 of wave A. Likely new impulse down, not correction
- Wave B retraces more than 100% of wave A. Corrective structure invalid
- Clear 5-wave structure not visible on chart. Skip, use different setup
0.618-1.272×A
Wave C Target
2.5:1
Typical R:R
💡 Pro Tip
Wave C is the 'final surrender'. Retail capitulates, momentum indicators make new lows even as price approaches the ideal termination zone. Bullish divergence on RSI or MACD during wave C is a classic confirming signal.