Calendar windows for three-wave pullbacks

Editorial frame

Editorial reading: treat a three-wave pullback as a dated experiment, not a named pattern. Mark the 42-, 49-, and 55-day appointments as soon as a peak prints. A case exists only if the third down wave lands inside one of those windows and a nearby stop can be written under the prior low before the first rebound close.

Editorial reading: the historical charts teach that sequence, structure first, calendar filter second, invalidation last.

When a reaction is complete

An ABC correction is a three-leg decline from a peak in which only the third down wave can complete the reaction. A two-wave pause is unfinished, and a four-wave finish into the same window can still count.

A reaction is treated as complete only when three down waves finish from a peak and the third low falls within one calendar day of a 42-, 49-, or 55-day count. Two waves down into day 42 are not a completion; a later third leg into day 55 remains possible. Four down waves into the same calendar count, usually on day 55, are still accepted.

The final low is never a higher low. A double-low shape is allowed, and the last rebound high may exceed the prior high.

Where the count may start

A double top can serve as the count origin. If identical highs span several sessions or a weekend, the count may start on whichever date produces a valid calendar landing when the three-wave shape is already clear. A February start can finish one day short of the usual one-day tolerance.

Calendar-day windows and location counts

A calendar-day window is one of the three dated targets measured from the peak, plus one day either side, where a third-wave low is allowed to complete. The three terminal windows are described as about equally common.

A location count is an intermediate day count to the second low and last rebound high, used to judge which of the three terminal windows is still live. A second low near days 19 to 22 often precedes a last high near days 34 to 38 and a finish near day 42. A finish near day 55 often has a second low near days 28 to 32 and a last high near days 42 to 46.

Volume and the third selling day

Each down wave often includes at least a sharp three-day selloff, with volume expanding at the lows. A short-term position is delayed until after that third selling day.

Signal day and the time stop

After a third-wave low inside a window, the recorded signal is the first close one-half point above the prior high that does not print a lower low. That session is the signal day. The case-study stop is then set about one and one-half points below the prior day's low.

A time stop is the pre-marked 42-, 49-, or 55-day calendar window that decides whether a third-wave low is on time, paired with that nearby protective stop written before entry so exposure is bounded if the rebound fails.

Four historical cases

In the Compaq case, a June 2 peak produced a second low on day 28, a last high on day 46, and a final low on day 56. Volume expanded at the June 16, June 30, and July 26 lows, and a two-point stop under the July 26 low is the recorded invalidation.

Three later cases use the same construction. Pfizer completed three down waves in 55 days from a July 1 peak to an August 25 low. Federal National Mortgage Co. counted from the February 10 side of a January 29 / February 10 double top to a March 30 1988 low on day 49. Temple-Inland fell from a February 8 1989 peak, made a second low at 21 days, and a third low on March 23 at 43 days.

Editorial note: Compaq's day-28 second low and day-46 last high sit on the path that often finishes near day 55. Temple-Inland's 21-day second low and 43-day third low sit on the path that often finishes near day 42. Pfizer lands on the 55-day window and Federal National Mortgage Co. on the 49-day window; those two cases are not given intermediate location counts.