PRO Course. Video Lesson
WAVE 4 DOWN
Wave 2 is a reaction to a completed Wave 1 up. Every completed bullish A-B-C fractal gives birth to a corrective A-B-C move in opposite direction. Wave 2 down is unable to break the starting point of the wave 1 confirming growing power of bulls and weakness of bears. After corrective wave 2 down is completed its lowest low marked by the red dot becomes the new main support level for the whole Five Wave fractal. If that new higher low established by the wave 2 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.