Wave 4
Wave 4 is the second corrective phase within a five-wave impulse sequence. It pulls back against the trend established by waves 1 through 3. The defining rule is simple: Wave 4 can never overlap with Wave 1 price territory. If it does, your count is wrong. The most common retracement target is 38.2% of Wave 3, though it can reach 50% in weaker trends. Wave 4 corrections tend to be sideways and time-consuming. You will see flats, triangles, and complex combinations far more often than sharp zigzags here. This is the alternation guideline at work. If Wave 2 was sharp and deep, Wave 4 will likely be shallow and drawn out. Traders find Wave 4 frustrating because it chops accounts to pieces. The best strategy is often to reduce position size or stand aside until the pattern completes. Watch for volume to dry up and volatility to compress. That is your signal that Wave 5 is about to launch.
Bitcoin rallies from $20,000 to $69,000 in Wave 3. Wave 4 begins a grinding sideways correction. Price drifts between $54,000 and $58,000 for weeks in a triangle pattern, retracing roughly 38.2% of Wave 3. Wave 1 topped at $48,000, so as long as Wave 4 stays above that level, the impulse count holds. Volume drops steadily through the triangle. When price breaks out of the triangle to the upside, Wave 5 begins.