The subwave (c) of wave ( iii ) up is the strongest part of the rally. When it manages to overcome resistance at the top of preceding leg up in subwave (a) of wave ( iii ) up very often it opens with a gap up. It literally can jump over that resistance overnight. Many traders believe its a safe bet to short a gap up in anticipation of price to come back down and “fill” the gap. However, that is not the case for that type of gap up that happens in the middle of subwave ( c ) of wave ( iii ).
If we zoom-in to get a better look at the micro structure of the subwave (c) of wave ( iii ) we will see that that subwave has an impulsive structure and is subdivided into five smaller waves labelled as i, ii, iii, iv and v. And what is notable is that the gap up normally happens inside micro wave c of iii of subwave (c) of wave ( iii ) .
That kind of gap may stay unfilled for a relatively long period of time. In particular, it may contain two pullbacks, in micro wave iv down and even in the first leg down of the following pullback, specifically subwave (a) of wave ( iv ) down! Despite common belief that gaps are magnets attracting price for getting them filled, the upper boundary of such a gap becomes a very strong support that does not let price to get that gap filled. Only the second leg down of a corrective wave ( iv ) may finally break under that upper boundary and fill the gap created by subwave ( c ) of wave ( iii ) up.
Simple Zig-Zag is the strongest type of a corrective wave. Waves A and C have impulsive structure. That is why corrective moves of this type are fast and deep.
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