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The Final Green Wave 5 of Red Wave (v) in Blue Wave 3
The current market structure is showing signs that we’re approaching the end of a major wave cycle. Based on the Elliott Wave framework, we appear to be in the final green wave 5 of wave (v), which itself completes blue wave 3. This phase has been developing for several sessions, and all signs now suggest that it’s nearing its conclusion.
For traders and investors following this pattern, this is an important stage. It’s the point where the ongoing bullish momentum begins to lose steam, signaling the possibility of a medium-term top or a shift toward a corrective move. In simple terms, the market may be setting up for a meaningful pause after an extended rally.
Understanding the Current Wave Structure
Elliott Wave theory helps us break down market behavior into repeating patterns of five-wave impulses and three-wave corrections. Currently, the green wave 5 represents the final leg of the ongoing upward movement within the larger structure.
If we map out the progression:
- Blue Wave 1 started the move and established the initial bullish momentum.
- Blue Wave 2 provided the first corrective phase.
- Blue Wave 3 extended significantly, showcasing strong market participation and clear directional conviction.
- Within Blue Wave 3, we’re now finalizing red wave (v), which consists of five smaller green waves.
That brings us to the present point: the final green wave 5, signaling that the current impulsive phase is approaching its end.
Expected Target Range: 1.3750 – 1.3800
The projected ideal target zone for this last push lies around 1.3750 to 1.3800. This area aligns with several technical confluences — Fibonacci extensions, prior resistance levels, and momentum exhaustion signals all fall within this band.
Historically, when a market completes a strong five-wave rally, price tends to respect these extension zones before a deeper retracement begins. This target doesn’t necessarily imply an immediate reversal, but it’s often where the risk-reward dynamic begins to shift. Traders who have been long from earlier levels may start booking partial profits or tightening their stops as we approach this zone.
Market Sentiment and Momentum Analysis
Momentum indicators are starting to show early signs of fatigue. While the trend remains technically bullish, the rate of change is slowing. Divergences between price and oscillators such as RSI or MACD often appear in the final stages of wave 5 movements, and we’re beginning to see that pattern unfold.
Volume has also started to taper off slightly, suggesting that the latest highs are being driven more by residual momentum than by new buying pressure. This doesn’t confirm an immediate reversal, but it does indicate that the uptrend may be running out of fuel.
In short, the market appears to be nearing the point where enthusiasm starts to fade and consolidation or correction becomes likely.
What to Expect Next: Blue Wave 4 Correction
Once the green wave 5 of red wave (v) completes, it should mark the end of blue wave 3. From there, we expect the market to begin blue wave 4, which historically represents a corrective phase.
Corrections after an extended impulsive run often take different forms — flat, zigzag, triangle, or even a complex combination. Early projections suggest that the retracement could be deep and prolonged, given how extended wave 3 has been.
Our preliminary target for blue wave 4 lies around the 1.1700 area, which aligns with prior consolidation zones and Fibonacci retracement levels (typically between 38.2% and 50% of the entire wave 3 move).
This corrective move would help reset the broader trend, relieve overbought conditions, and prepare the groundwork for the final blue wave 5 — the next potential bullish phase after the correction completes.
Trading Perspective and Risk Considerations
For active traders, this is a phase to be cautious rather than aggressive. While short-term opportunities may still exist as the market completes the final part of the rally, chasing new long positions at these levels carries increased risk.
The ideal strategy at this stage would be:
- For existing long positions: Consider partial profit-taking near the 1.3750–1.3800 region.
- For new entries: Wait for confirmation of the blue wave 4 correction before initiating fresh trades.
- For short-term traders: Watch for reversal patterns or divergence setups around key resistance zones.
Risk management remains the top priority. Markets in late-stage wave formations can become volatile and unpredictable, with false breakouts or sharp reversals being common.
Longer-Term Outlook
The completion of blue wave 3 and the following blue wave 4 correction will not necessarily signal the end of the broader trend. If the Elliott structure continues to unfold as expected, another bullish wave (blue wave 5) could form later, potentially revisiting or exceeding current highs.
However, the short-to-medium-term focus should remain on managing positions as the market transitions from impulsive to corrective behavior. Periods of consolidation often bring confusion and frustration for traders who fail to adjust their expectations. Staying patient and following the wave structure step-by-step will be crucial.
Ending Outlook
We’re now in the final stages of an extended bullish sequence. The green wave 5 of red wave (v) in blue wave 3 is showing exhaustion signs, with a likely completion near 1.3750–1.3800. After that, a broader blue wave 4 correction is expected, possibly extending toward 1.1700.
Whether you’re an intraday trader or a medium-term investor, understanding where we stand in the wave structure helps manage expectations and risk. While it’s tempting to chase the last leg of a rally, history shows that patience during transitions between waves pays off more than impulsive entries.
As always, continue to monitor price action closely, watch for confirmation signals, and adjust your strategy accordingly. Market cycles are natural — recognizing when one phase ends and another begins is the real edge in trading.
Wisdom from Past
“Amateurs want to be right. Professionals want to make money.” — Anonymous
Crucial Risk Management Advice
Crucial Advice: Effective trading is based on disciplined risk management, not prediction certainty. Always use a firm stop-loss to protect your capital. Macroeconomic news, particularly from the Federal Reserve or the European Central Bank, can override any technical pattern instantly.
About the Author
Ghulam Muhiuddin, Certified Technical Market Analyst
Experience: This analysis reflects the insights gained from 18 Years of consistent market analysis and forecasting, specializing in the application of the Elliott Wave Principle and advanced technical structures.
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