The above graph is an impulsive cycle, please note it works the same for corrective cycles.
The cycle starts with a minor impulse wave (I), a small retracement (II), then a major impulse wave where the majority of the traders come in ( III ), eventually buying is exhausted and we have another retracement (IV), but there are always those that feel this is a buying opportunity and we get a final impulsive wave of buying V. At the end of the 5th wave, there are simply no more buyers, and we get a pullback or corrective cycle labeled ABCDE. Each one of these waves down is made up of impulse and corrective waves as well. When we finish, we have completed an entire cycle (or sub cycle). Once the cycle completes we have either a continuation, or a reversal. This is why you have seen me post many articles with consolidation boxes. I use this in conjunction and other support resistance lines to determine whether the next cycle will be or . You must keep in mind that we may be in a wave 3 of the current cycle, but wave V of a longer cycle. This is critical in determining whether the next leg is up or down. In coins it's not as difficult as they are not that old. But you must keep this in mind.
GNT is and ugly chart if your just starting out and makes for a good exercise. When seeing a chart like this, where it is not really clear from just looking, I start to draw trend channels or lines. Trends and patterns work in conjunction with each other, and if you are having trouble figuring out what wave we are in, start with from obvious points. You'll note I didn't care about the peaks on up-trends, and dips in down trends. That's because when drawing and uptrend you only care about the lower ends, and upper end in down trends (at least for this application).
But now we are in consolidation and we must be patient to see if we will continue in a down trend or reverse and start a new uptrend. Hence we must be adamant about not rushing into buy until we break consolidation and find support at one of our key levels. If it resists and falls back we start all over. I have drawn the channel and marked where the resistance and support levels are. We need a break out and retest of those supports to confirm the cycle has started.
EW is not that hard, and there are only 3 laws to go by. But of course there are 30+ guidelines. If you don't think it doesn't work, think back. Have you ever felt the need to buy something because you were afraid of missing out and bought in at the top, or better yet felt the urge to sell because the sky was falling and sold right at the bottom. It's psychological, and no matter what market it is it works!
The correction wave was incorrectly labeled.