Terminal Impulse

In a terminal impulse, like in any other impulsive move, at least one wave needs to be extended. Terminal impulsive moves are to be found as fifth waves of an impulse of a larger degree or as c waves of a zig-zag, flat, or any other correction that involves a c wave.

Contrary to trending impulse pattern, it is required for wave four and wave two to overlap, that giving the terminal impulse the look of a wedge.

After a terminal impulse occurs, price action to follow must retrace the entire pattern in 50% of less of the time taken the patten to form in the first place, but sometimes it is taken way little time than 50% and this is due to the fact that it has this wedge look like. Rising and falling wedges are being interpreted by market participants as being reversal patterns (which they are not), and this is why, after the lower (in a a rising wedge) or the upper (in a falling wedge) trend line of a wedge is broken, everybody will jump on the short/long side aggressively. And this is the main thing why price action after a terminal impulsive move price quickly retraces the whole setup, or at lest fifty percent of it in such a short notice.

Terminal impulses are coming in the form of 3-3-3-3-3 and they are ending diagonals that travel withing the 1-3 and 2-4 trend lines. For more about the rules and the guidelines that govern the existence of an ending diagonal please refer to the chapter dedicated to them.

A terminal impulse always completes a wave of a larger degree, and if it is the fifth wave on an impulsive pattern, usually the larger impulse pattern will also be completely retraced. This is important as such a characteristic makes terminal impulses structures that require lot of attention and this is one of the reason I dedicated an entire chapter to them.

The recordings that come with this chapter will have many examples of such a pattern and will illustrate what are the theoretical shapes for it.

Leave a Reply

Your email address will not be published.