Fifth Wave:

The fifth wave represents traders' final attempt to create new highs (or new lows). It is not as exhilarating or intoxicating as the third wave. Generally, the slope of the fifth wave cannot match that of the third wave. Professional traders will use the new market highs (or lows) to take profits, while novices still attempt to enter and establish new positions. The calculation method for the target endpoint of the fifth wave follows our previous explanation. Within the target zone we identify, once a dense price action area appears, we can more confidently confirm it as the endpoint of the fifth wave. The length of the fifth wave is measured from the endpoint of the fourth wave, so we must first determine where the fourth wave ends.

One of the most precise indicators for predicting the endpoint of the fifth wave is the "target zone." First, measure the price gap between the starting point of the first wave and the endpoint of the third wave. Then, starting from the endpoint of the fourth wave, the price length of the fifth wave will mostly fall between 100% and 62% of the aforementioned price gap. If you perform the same calculation for the fifth sub-wave within a larger fifth wave, the target price can be even more precise. Generally, when analyzing lower-degree five-wave sequences within the fifth wave, the target zone will often fall within the target zone of a higher-degree wave. This further narrows down the target zone. Additionally, by incorporating our proprietary fractal and dormant indicators, as well as divergence between the third and fifth waves, you can very precisely set profit-taking and entry points.

After completing a five-wave sequence, the entire structure becomes a single wave of a higher degree. Thus, when Waves 1 through 5 are completed, the entire sequence becomes a higher-degree Wave 1, 3, or 5. Similarly, after an a-b-c sequence completes, it becomes a higher-degree Wave 2 or 4.