FOREX THEORY
The 3 cardinal rules guidelines
There are the guidelines that help you in correctly labeling
waves. Unlike the three cardinal rules, these guidelines can be broken. Here
they are:
Conversely, sometimes, Wave 5 does not move beyond the end
of wave 3. This is called truncation.
Wave 5, more often than not, goes beyond or “breaks through”
the trend line drawn off Wave 3 parallel to a trend line connecting the start
of Waves 3 and 5.
Wave 3 tends to be very long, sharp, and extended.
Waves 2 and 4 frequently bounce off Fibonacci
retracement levels.
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