The characteristics of each wave are briefly described below.

(1) The first wave: About half of the first waves are part of creating the bottom form. The adjustment amplitude of the second wave that follows this type of first wave is usually larger; the remaining half of the first wave appears after a large adjustment pattern, and the increase in this type of first wave is relatively considerable.

(2) The second wave: Sometimes the adjustment is quite large, making market participants mistakenly believe that the bear market is not over yet; the trading volume gradually shrinks and the volatility is thinner, reflecting the gradual exhaustion of selling pressure; a turn in the traditional chart appears Forms, such as head and shoulders bottom, double bottom, etc.

(3) The third wave: usually the most explosive wave; the running time and amplitude are often the longest wave; most of the time it becomes an extension wave; the trading volume increases significantly; a traditional chart appears Breakthrough signals, such as gap jumps, etc.

(4) The fourth wave: often appears in a more complex form, and there are many opportunities to operate in a triangle adjustment form. It usually ends within the range of the lower level of the previous fourth wave. The bottom of a wave will never be lower than the top of the first wave.

(5) The fifth wave: The increase in the fifth wave in the stock market is generally smaller than that in the third wave. In the futures market, the opposite situation occurs. The fifth wave has a greater chance of becoming an extension wave; market optimism trumps everything else.

Extended information:

The shape of the wave is the basis of the wave theory. Therefore, it is very important to count the waves correctly or not. There are only two basic rules for counting waves. If you persevere, you can say that you have already won half the battle.

First: The third wave (impulsive wave) can never be the shortest wave among the first to fifth waves. Generally speaking, the third wave is the most explosive and often the longest wave.

Second: The bottom of the fourth wave cannot be lower than the top of the first wave.

Baidu Encyclopedia-Five Wave Theory