The ABC correction wave is the three downward waves of the wave theory.

The wave theory is divided into five rising waves and three falling waves. Generally speaking, the eight waves each have different performances and characteristics:

Wave 1: (1) Almost half of the first wave is the first part of creating a bottom pattern, the first wave It is the beginning of the cycle. Since the rise in this period of market occurred in the rebound and reversal after the decline in the short market, the buyer's power is not strong, and the short sellers continue to have selling pressure. Therefore, after the first wave of this type of rise, the second wave appears. When the second wave adjusts and falls, the amplitude of the retracement is often very deep; (2) The other half of the first wave appears after the completion of a long-term consolidation. In this type of first wave, the market rises by a larger margin. From experience, , the increase in the first wave is usually the shortest among the five waves.

Wave 2: This wave is a downward wave. Because market participants mistakenly believe that the bear market has not yet ended, the adjustment and decline is quite large, almost eating up the increase in the first wave. When the market is in this wave When it falls close to the bottom (the starting point of the first wave), the market shows a reluctance to sell, the selling pressure gradually exhausts, and the trading volume gradually shrinks, the second wave adjustment will come to an end. In this wave, turning patterns often appear, such as the head. bottom, double bottom, etc.

Wave 3: The rise in the third wave is often the largest and most explosive rising wave. The duration and amplitude of this market are often the longest. Market investors’ confidence is restored and transactions are completed. The volume has increased significantly, and breakthrough signals in traditional charts often appear, such as gap jumps, etc. The market trend during this period is very intense, and some graphic levels can be broken through very easily, especially when breaking through the high point of the first wave. It is the strongest buying signal. Due to the intense rise in the third wave, the phenomenon of "extended wave" often occurs.

The 4th wave: The 4th wave is a correction wave after a sharp rise in the market. It usually appears in a more complex pattern, often with a "tilted triangle" trend, but the low point of the 4th wave will not be lower. at the top of wave 1.

Wave 5: In the stock market, the rise of the fifth wave is usually smaller than that of the third wave, and failures often occur. In the fifth wave, the second and third types of stocks are usually the dominant ones in the market. Power, its rise is often greater than that of a category of stocks (blue-chip stocks, large-cap stocks), which is what investors often call "chickens and dogs rising to heaven". At this time, market sentiment is quite optimistic.

Wave A: In wave A, most market investors believe that the rising market has not yet reversed, and is only a temporary retracement phenomenon. In fact, the decline of wave A began in wave 5. There are usually warning signals, such as the divergence between trading volume and price trends or the divergence in technical indicators. However, because the market is still relatively optimistic at this time, the A wave sometimes shows a flat adjustment or a "zig-zag" pattern.

Wave B: Wave B often shows a small trading volume and is generally an escape line for bulls. However, because it is a rising market, it is easy for investors to mistake it for another wave of rising prices. The trend formed a "bully trap", and many people were trapped during this period.

Wave C: It is a downward wave with strong destructive power. The decline is relatively strong, the decline is large, it lasts for a long time, and there is a comprehensive decline.

From the above, the wave theory seems to be quite simple and easy to apply. In fact, because every complete process of rising/falling contains an eight-wave cycle, there are small cycles within the big cycle. , there are smaller cycles within small cycles, that is, there are small waves within big waves, and there are small waves within small waves. Therefore, it makes counting waves quite complicated and difficult to grasp. In addition, its impulsive waves and corrective waves often have changes such as extension waves. Patterns and complex patterns make it more difficult to define the accurate division of waves. These two points constitute the biggest difficulty in the practical application of wave theory.