A failure is an impulsive pattern in which the fifth wave does not exceed the third wave. Fifth waves, which travel only slightly beyond the top of wave 3, can also be classified as a kind of failure. It indicates that the trend is weak and that the market will show acceleration in the opposite direction.
Rules and guidelines
The most important rules and guidelines are:
• Wave 2 cannot be longer in price distance than wave 1, so it should not go beyond the
origin of wave 1.
• Wave 3 is never the shortest when compared to waves 1 and 5.
• Wave 4 cannot overlap wave 1, except for diagonal triangles and sometimes in waves 1
or A, but never in a third wave. There should not be overlap between wave 1 and A.
• Wave 5 fails to go beyond the end of wave 3.
• As a guideline the third wave shows the greatest momentum.
• As a guideline the internal wave structure should show alternation, which means different
kinds of corrective structures.
In which wave:
A failure can only occur in a fifth wave or a C wave, but normally not in the fifth wave of wave 3.
It must be composed of five waves.