It is a technical analysis tool that is drawn between three points on the price chart. The first point signifies the beginning of wave 1, the second point the end of wave 1 and the third wave the end of wave 2. The tool, displays three lines at 61.8%, 100% and 161.8% the length of wave 1(i.e. the distance between the first and the second point). These lengths (i.e. expansions) are drawn starting from the end of wave 2 (i.e. third point). The theory holds that at these levels, (i.e. expansions) significant changes may be expected, for example, the end wave 3.
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