2006issue C061-6
Wave 3 trend exits with pitchforks, channels, and Fibonacci
This archive case study reconstructs a historical workflow for exiting an unfolding third impulse wave. A pitchfork and wave-degree channels measure slope and bound later development, while Fibonacci multiples of the first wave and a three-timeframe check mark when the move is still extending.
- A pitchfork from an extreme high or low, with action and reaction lines through later highs and lows, measures wave-3 slope and marks an exit where price crosses the first upper parallel above the median line.
- After a completed fourth-wave retracement inside a third wave, wave-degree channels bound further development, and a 50 percent Fibonacci midpoint is drawn when the wave-1 to wave-3 span is wider than the base-to-wave-1 span.
- A 4.236 multiple of the first wave is the marked third-wave price objective, with a 6.85 multiple discussed only after that zone is approached.
- The execution chart holds entries and exits, a larger chart confirms trend and wave type, and a smaller chart times a reversal bar only in the direction of the higher-timeframe trend.
The archive workflow
This archive article restates a historical case study of an unfolding third impulse wave. Elliott wave analysis is used to identify the impulse wave. Pitchforks, wave-degree channels, and Fibonacci retracement relationships then mark where the third wave may still be extending and where it may be losing force.
Measuring slope with a pitchfork
A pitchfork is built from an extreme high or low, with action and reaction lines through later highs and lows. The construction is presented as a way to measure wave-3 slope. An exit is marked where price crosses the first upper parallel above the median line.
Bounding the third wave with channels
Wave-degree channeling begins after a completed fourth-wave retracement inside a third wave. It is used to bound further third-wave development. The listed guides are the wave-2-to-4 base line, the wave-1 and wave-3 parallels, a 50 percent wave-1-to-3 parallel, and a nonparallel line through wave-1 and wave-3 tops.
When the distance between the wave-1 and wave-3 parallels exceeds the distance between the wave-2-to-4 base and the wave-1 parallel, a 50 percent Fibonacci midpoint of that span is drawn. The fifth subwave of the third wave is described as often ending near that level.
A strong-momentum break of the wave-3 parallel is followed by a nonparallel line through the tops of the first and third subwaves. That line is described as a possible termination area for an elongated fifth subwave of the third wave.
Fibonacci objectives from the first wave
In the illustrated third-wave case, a 4.236 multiple of the first wave is marked as a price objective. A further 6.85 multiple is discussed as a possible higher extension once that zone is approached.
Three timeframes and Fibonacci settings
A three-timeframe workflow is specified. The execution chart identifies entries and exits. A larger chart confirms trend, wave type, and proximity to reversal. A smaller chart is used only to time entry, exit, and a reversal bar in the direction of the higher-timeframe trend.
On the five-minute decision chart, second and fourth waves are not treated as trade setups unless the first and third waves extend beyond a 2.618 relationship.
Chart parameters, timeframes, exponential moving averages, and indicator settings are restricted to Fibonacci numbers so that the nested wave structure stays internally consistent.
Gaps, duration, and exit signs
Three gap types are mapped onto impulse structure. A breakaway gap at trend onset is described as remaining unfilled. A continuation gap near the middle of the third of the third wave may be only partly filled. A lower-volume exhaustion gap on the fifth wave fills after reversal once the two-to-four base trendline breaks.
Fifth-wave duration is expected to exceed the duration of the subsequent break of the two-to-four base trendline. A close below the upper third of a wide-range bar and a confirming divergence are treated as signs to tighten stops and exit on a reversal bar.
All readings on this track · 12 readings
- 2001Impulse-wave subcounts as a case-study filter
- 2006Wave 3 trend exits with pitchforks, channels, and Fibonacci
- 2006Four-leg Fibonacci reversal as an impulse wave checkpoint
- 2010An unfinished fifth wave blocked a second-wave count
- 2010Write the rubber-band long before the fill
- 2011A 5% trail cannot say whether the impulse-correction count is still alive
- 2012Wave counting as context before trade setups
- 2012A weekly-close test of impulse, correction, and the 61.8% stop
- 2013When wave templates fail under momentum override
- 2013Late momentum is a five-wave sentiment trap
- 2019Counting successive impulses after a productivity shock
- 2020Wave counts and Fibonacci targets as a falsifiable trade plan