There are three significantly
different formations possible. No matter which touch points are used to draw
trend line, they should be always parallel or near parallel.

The 4^{th} wave should not retrace more than 38.2% of wave 3. If it does there would be a 5^{th} wave failure. This setup occurs when wave-1 is mircoscopic in relation to extended 3^{rd} wave. The 5^{th} wave usually relate to the whole move (from wave1 to wave 3) be 38.2%. If it is more than 38.2% than it is a zigzag with missing wave.

In above both cases, wave 5 will not break the upper line.

If wave 3 is subdivided the 3^{rd} wave of wave 3 will be extended. Smaller wave 2 take less time, less price and retrace less than larger wave 2. And also 0-2 trend line should not be broken by smaller wave2 correction.

5^{th} wave can fail when 3^{rd} wave extended. If wave 4 is the complex correction, the 5^{th} wave should equal to or greater than wave 1. If wave 2 is the complex correction the 5^{th} wave should equal to or less than wave 1. If wave 1 is extremely small in relation to wave 3, the 5^{th} wave will be 38.2% of distance from wave 1 to wave 3. 5^{th} wave must be less than 61.8% of wave 3.

Internal relationship: wave 3 must be more than 161.8% of wave 1. Wave 1 & wave 5 should nearly equal in price, if wave 1 is not equal to wave 5 than will normally be 61.8%, 161.8% or 38.2% of wave 5. Wave 1 can’t relate to wave 3 by 61.8%, it could be by 38.2%.

External relationship: there is no external relationship, because market turning points are too close or too far way.

If the 3^{rd} wave extends within an impulse wave, the reaction should return to at least to 4^{th} wave zone (anywhere highest to lowest price of that zone) of that impulse wave.