Simple's Green Room

[pennies2007]

Wave 5 isn't the top most of the time...that's the key to counting. Tops typically occur at either Wave 2 or Wave 4 of the next series...more often Wave 2 of the new count.

So when you see a Wave 5 peak formed, look for an initial pullback away from there and then a move right back to near the TDI wave 5 high...that most often forms a final top. But there are times when it's Wave 4 in the new series that forms the final top. So you may actually see a 1-2-3-4-5 and then a 1-2-3-4 before the final high is reached on price.

5 Waves up or down just determines the primary sequence. But the 2nd wave of the new series is what forms the divergence that we normally look for...negative divergence for tops and positive divergence for bottoms.

The general rules are as follows:

(1) Waves 2 and 4 form tops and bottoms most of the time.

(2) Waves 1 and 3 are the ones that "break formation"...in other words, they signify a shift in the previous TDI channels.

(3) Wave 3 normally displays the first sign of high volume candles.

(4) Wave 4 to 5 is ALWAYS (no exceptions) the best wave count to play when counting TDI waves.