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Oct 23, 1998
Extracts Mentor"
Presuming an upward 5-wave movement, let us see how much data we now
have:
wave-1 = 7467 to 8084 = 617
wave-2 = 8084 to 7920 = 164
wave-3 = 7920 to 8653 = 733
Remember that wave-3 can NEVER BE the shortest of the 3 impulse waves
1,3 & 5. In this case, wave-3 is longer than wave-1 but is much less
than 1.618 times wave-1 for it to be considered the extended wave.
The trendline drawn from 7467 through 7920 will be breached today, if
yesterday's bottom of 8422 is broken today.
61.8% of wave-3 is 733 x 0.618 = 453 points. Hence the wave-4 should
not go below (8653 - 453) = 8200. However, there is an exception
here. If the wave-4 breaks into an a-b-c flat pattern, the a-wave
can go below 8200 BUT CANNOT GO INTO THE WAVE-2 ZONE, i.e. it cannot
go below 8084. The b-wave would then in all probability be irregular,
i.e. it will go above 8653 and the subsequent c-wave downwards will
fail at a point above 8200 thereby terminating the wave-4.
In a wave-5 extension pattern, the wave-4 must be the more complex
wave when comparing it to wave-2. Wave-2 looks quite simple as it is.
In a 5th wave extension, the minimum length of wave-5 must be
equal to the market movement from 0 to 3, i.e. 7467 to 8653 = 1186
points or wave-5 must be 1.618 times wave-3, i.e. 1.618 x 733
= 1186. In this case, the minimum length of wave-5 works out to the
same but otherwise the minimum length would be the lesser of the 2
calculations.
it is too early at this stage to know exactly what the market
will do. All the above is hypothetical because there are still many
possibilities but I thought it would be a good oppurtunity to talk
about 5th wave extensions."
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