Movements against the general trend are being called corrective waves and they are one of the most difficult to identify and trade waves within the theory. The reason for such a thing comes from the many forms a corrective wave may take, and in order to stay ahead of the market you need to be always prepared with different scenarios that imply a certain level is broken or not.
A second wave under the impulsive move can take the shape of a zig-zag, if this is a simple correction, a flat or an irregular correction. However, complex forms are also met on the second waves and they come in different forms like double-threes, triple-threes, double combinations, triple combinations, and the list can go on. I will cover most of these patterns under this project at the appropriate time.
What is important to know about the second wave is that it is never coming in the form or a triangle and it retraces usually between 50% – 61.8% the distance traveled by the first wave. From my experience I can say that the more complex the correction for the second wave, the more powerful the upcoming 3rd wave is going to be. And of course, like stated on the previous chapter, second waves cannot go below the beginning point of the first wave as this would invalidate the whole count.
Second wave corrections are being looked by traders all over the world because they are preceding third waves and every trader wants to be in a third wave move as this one typically is aggressive and extended as well, hence the possibility of making a nice profit while riding the third wave is attractive. However, they are tricky only because of the different forms this wave can take.
The recordings for this sub chapter will have different examples for second wave corrections and much more.