Wave 3:

Robert Prechter called Wave 3 the "wonder to behold." Wave 3 offers the greatest profit opportunities. One of its distinctive features is its slope, which is typically steeper than Wave 1. Wave 3 occasionally exhibits near-vertical movements that may be mistaken for the "blow-off" movement of Wave 5. Trading volume is generally higher during Wave 3. If the trend remains strong while volume decreases, it usually indicates a blow-off scenario. During Wave 3, fundamental economic data begins to support the ongoing trend (unlike in Wave 1). Both fundamental and technical factors reinforce each other, making this the most profitable period in the market and an ideal time to ride the trend.

The initial target zone for Wave 3 can be set between 1 to 1.62 times the amplitude of Wave 1. Wave 3 rarely measures less than Wave 1 and frequently exceeds 1.62 times Wave 1's amplitude. The best method to determine Wave 3's termination point is to analyze it using smaller timeframes and apply the "Five Magic Bullets" to comprehensively judge the end of Wave 3's fifth sub-wave. These magic bullets are:

1) Divergence in the MFI oscillator;

2) Position within the target zone;

3) Fractal formation at tops (bottoms);

4) "Dormancy" window in one of the three endpoint bars at tops (bottoms);

5) Change in momentum direction shown by the "Consistent Profit Method" MACD.