1: it has many overlapping waves,
2: it is contained in a channel,
3: it follows a wave that has the "right look" for being impulsive.
Luckily for traders, corrective waves are typically retraced 100%. Knowing this tendency can give us the confidence to aggressively enter into a trade even before the trade had signaled that it is complete.
Entry points for agressive trades:
Ladder into a position by buying at the 50%, 61.8% and 78% levels. Waves tend to retrace at a minimum 38% of a previous wave, but more often retrace more ie 50, 61.8, 78. For example, within the last day, CND has hit the level. Some traders might choose this moment to get into this trade even before price action confirmed a reversal. This might not be the final bottom, but it is a very good probability that this could be the bottom or near the bottom. The stop would then be set at the bottom of the previous wave.
For a more conservative approach, we always wait for price to confirm a breakout.
1: we wait for an impulsive wave to form on a smaller time frame (15 minute).
2: We look for breaks
3: we look for a corrective second wave to form retracing to 61.8%
4: often a , , or triple bottom pattern will form
5: often will start having higher highs and higher lows as confirmation.
6: will often show a divergence at the end of a wave.
Confirmation happens when the of the is broken, confirmation happens when price closes over the top of the impulse wave at a smaller degree. Confirmation happens at a close of a candle above the 55 EMS, confirmation happens when there increasing significant with strong candles.
Not all patterns will contain all of these signs, and sometimes reversals don't have the "right look" When the "right look" doesn't happen, it is hard from an perspective to get into a trade by price confirmation. I usually sit out when things don't have the right look.
At the moment, we have a few signs of a reversal but do not have the "right look". I would still expect the bottom of the correction to be retested. But I also know the correction could be over and I will be on high alert to look for the "right look" for entry.