Something I read this morning about Wave 2 psychology:
"Despite the seemingly pessimistic retracement, Wave 2 is essential. It “clears the deck” by shaking out weak hands and emotional traders who remain attached to the old trend. This process, though painful in the short term, ultimately prepares the market for Wave 3—a phase typically marked by strong, confident movement driven by those who had the courage (or foresight) to stick with the emerging trend."