Figure 4-3 Figure 4-4 Figure 4-5

Another typical development is that wave 5's length is sometimes related by the Fibonacci ratio to the
length of wave 1 through wave 3, as illustrated in Figure 4-4, which illustrates the point with an
extended fifth wave. .382 and .618 relationships occur when wave five is not extended. In those rare
cases when wave 1 is extended, it is wave 2, quite reasonably, that often subdivides the entire
impulse wave into the Golden Section, as shown in Figure 4-5.

As a generalization that subsumes some of the observations we have already made, unless wave 1 is
extended, wave 4 often divides the price range of an impulse wave into the Golden Section. In such
cases, the latter portion is .382 of the total distance when wave 5 is not extended, as shown in Figure
4-6, and .618 when it is, as shown in Figure 4-7. This guideline is somewhat loose in that the exact
point within wave 4 that effects the subdivision varies. It can be its start, end or extreme counter-trend
point. Thus, it provides, depending on the circumstances, two or three closely-clustered targets for the
end of wave 5. This
guideline explains why the target for a retracement following a fifth wave often is doubly indicated by
the end of the preceding fourth wave and the .382 retracement point.

Figure 4-6 Figure 4-7

Corrective Wave Multiples