The 1-2-i-ii setup is one of the best setups for a big, long directional move. It often precedes an A-B setup (a-b-1-2-i-ii). Of course, this pattern can happen up or down.
On an intraday basis, here’s what it looks like:
Coil 1-2 Structure
Not all indices map out exactly (S&P vs Russell)
While S&P had a short wave II down and did not go below that low, the Russell was only making wave a — followed by a b-wave up and the a hard c-wave down to complete wave II — retesting the lows yet again into the close.
Given that we already experienced an A wave followed by a B wave in the opposite, if we then experience the following:
A wave 1 that is usually shorter than the preceding A-wave
A wave 2 that is usually shorter than the wave 1 that does not retrace more than where wave 1 started
Followed by a smaller wave i and smaller wave ii
…then, what follows could be longer wave iii that does not contain much retrace for a good amount of time, offering one of the best long or short directional opportunities.
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