While wave 2's can come in many shapes and forms with shallow and deep corrections. The number that most always comes into play with wave 2's is .618 fib number.
This number is calculated by taking the (high minus the low) of the last 5 wave sequence (higher or lower) and multiply by .618. The number you get will be deducted from the high of what you think may be the end of wave 1 in the possible start of the uptrend.
An example would be in the sugar market from a low of 1470 to a high of 16.38. 5 waves up would be a possible wave 1. Now the .618 target would be the (low-high) multiplied by .618 and deducted from the high of 16.38.
.786 is calculated the same way…
The only rule we have to keep in mind is that wave 2's can never trade below the start of wave 1. In this ex. Trading just 1 tick below would invalidate this count as a potential 1,2.
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