As long as a trend is in its normal state, there's usually a line acting as the zero level for waves in the trend. Whenever price reaches and passes the center line, it is expected to reach an extreme as far as the distance between the last extreme and center line. When it fails to do so, it's an early indication that the current trend is coming to an end.
is also near an important diagonal level (dotted purple line) that can act as a resistance area
and cause the price to go lower.