Subwave B down of Wave 3 up
Watch Video Lesson
FIVE WAVE UP.
WAVE B of 3 DOWN
Wave B of 3 is a bearish reaction to a completed bullish Wave A of 3 up. This is when bears still believe they can reverse that rally and push price to new lower lows. However, wave B of 3 is unable to break under the previous important low, a critical support established by wave 2 down.
After corrective wave B of 3 down is completed its lowest low marked by the red dot becomes the new main support level for the following corrective waves. If that new higher low established by the wave B of 3 gets violated by the next corrective wave we say that the five wave up structure gets invalidated because one of the formal rules is broken.
The best way to understand how this pattern works is to study collection of charts with real life examples.