Fifth wave extensions are the most difficult to count – because when you are in a 5th wave extension, you may be considering a lot of other possibilities — and when the pattern just keeps going up in a straight line for multiple days in a row – it’s difficult to count.
But then when you step back and look at it holistically, it makes much more sense.
So whenever you begin with an A-B-1-2 and then it goes straight up from there — reference this diagram so you know how long a 5th wave extension could last.
Also, it happens to keep in mind the time frame. For example, a Santa Rally – just a few days before Christmas — could experience a prolonged upward movement — even beyond supposed resistance zones. The market will just blast right through those–until the last 15 minutes of Christmas eve — when it finally finalizes the fifth wave extension and the Santa Rally is over.
The Santa Rally extended 5th wave above didn’t stop at 2060 — it did pull back towards 2045, but then extended yet another 5th wave up towards 2075 — completing this C-wave of an A-B-C wave 2. The top of this C-wave exceeding the top of the prior A-wave high.
This chart looks like the top towards 2075 was lower than the preceding high of what looks like 2080 — but actually the front-month ES futures contract had a changeover from December futures contract to March futures contract. So this chart isn’t the best representation. But if you look at a chart from Finviz of S&P futures, you will see that the top of C in this A-B-C wave 2 structure exceeded the top of A.
Here is a FinViz chart of the S&P futures on daily chart — notice the wave 2 top had a C-wave high that was higher than the initial A-wave high near the 2075 level. The c-wave high was an extended 5th wave pattern as shown above.
Here we can see the A wave up, B-wave down, and C-wave up that had multiple extensions extending it beyond the top of wave A towards 2075
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