Subwave A of Wave 3 up
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Subwave A of Wave 3 up

Completion of wave 1 up and 2 down creates very strong bullish argument. Subwave C of 1 makes a higher high over the top of the subwave A of 1. And Subwave C is terminated making higher low being unable even to reach the previous low at the starting point of the wave 1 up. After bears give up being unable to push the price to a lower low bulls counter attack and push the price back up to its latest highs in a subwave A of the wave 3. It is impossible to predict whether subwave A of 3 will stall at the highs established by previous rally in the wave 1 or will be strong enough to establish a new higher high.


The best way to understand how this pattern works is to study collection of charts with real life examples.