After Wave 4 concludes and Wave 5 begins, we can start estimating the target endpoint of the five-wave sequence. First, measure the price distance between the end of Wave 1 and the end of Wave 3. Multiply this distance by 100% and 62%, respectively, to define a "target price range." Then, starting from the end of Wave 4, the endpoint of Wave 5 will typically fall within this "target price range."  

Next, apply the same estimation process to the five-wave sequence within Wave 5 to calculate the target zone for the fifth sub-wave of the larger Wave 5. This helps narrow down our projected target area. Note that if a divergence occurs between price and the oscillator between the peaks of Wave 3 and Wave 5, it signals the completion of the five-wave sequence.  

**Displaying Immediate Momentum Direction**  

Here, we first determine the relative position between the 5/34 oscillator histogram and its signal line (the signal line is the 5-period simple moving average of the 5/34 oscillator). We then trade only in the direction of the prevailing momentum. This serves as a highly precise filter for measuring momentum shifts. If the histogram is below the signal line, we only take short positions. If it is above, we only take long positions.  

A minor but crucial detail for improving wave-counting accuracy: When using an appropriate chart (100–140 bars), if divergence occurs but the MACD does not retrace to the zero line, it suggests the peak of Wave 5 within a higher-degree Wave 3, indicating the end of the larger Wave 5. Misinterpreting this may lead traders to open counter-trend positions, only to be stopped out when the true Wave 5 emerges.  

When the market completes the fifth sub-wave of a larger Wave 3, the MACD will retrace to the zero line, fulfilling the minimum condition for the end of Wave 4. Wave 4 often concludes near the end of the fourth sub-wave within Wave 3. If this point aligns with Fibonacci retracement ratios, the target's reliability increases significantly.  

Once proficient with our MACD method, traders can confidently discard stochastic oscillators, RSI, momentum indicators, and similar tools. No other indicator matches the precision of our MACD. For serious futures traders, this MACD approach is invaluable.  

Divergence patterns occur frequently across all commodities daily, making this method applicable to both intraday and longer-term position trading.  

**Conclusion**  

This chapter explores Elliott Wave Theory and the fundamental market rhythms it follows. We analyze the characteristics of individual waves and clarify ambiguities in wave counting.  

The key focus is demonstrating the four functions of the 5/34/5 MACD, supported by practical examples of its effectiveness.