The Handbook of Technical Analysis + Test Bank

As time passes, the number of participants who want to accumulate long and short positions within the consolidation begins to decrease. This

It should also be noted that the longer it takes for a consolidation to unfold, the larger will be the number of potential buy stop orders that lie above the resistance zone and sell stop orders that populate just below the support zone. This explains why larger consolidations tend to produce stronger and more persistent breakouts.

traders have a tendency to be less willing to risk or gamble with profit than with losses, in what is described by Kahneman and Tversky as prospect theory. This unwillingness to gamble with profit helps explain why prices frequently retrace back to the breakout level

In short, traders seldom trade based on what they actually perceive to be occurring in the market. They prefer to trade on what they expect to see occur in the markets. Hence, the market is driven primarily by trader and investor expectations.

It is a well-accepted fact that the market is driven by expectations. In other words, the market is driven by the expectation of future prices. Expectation itself is a consequence of various beliefs, biases, habits, knowledge, attitudes, and emotions. Fear, greed, and hope play a very large part in trading and investing

For every 20 good reasons, there are 20 other reasons why one should not invest in a certain market or stock. The final decision is usually one based not so much on fact, but rather on psychological and emotional preference or pressure.

WAVE EXTENSIONS AND TRUNCATION

Alternation is a guideline with broad applications. It suggests that some pattern or behavior should alternate with another different pattern or behavior. Alternation expresses itself in the following ways:
If corrective wave 2 is a simple and sharp correction, then corrective wave 4 should be a complex flat correction (and vice versa).
Within a three-wave corrective pattern, alternation suggests that wave pattern B should be different from wave pattern A or C.
Within a three-wave corrective pattern, alternation suggests that if wave A is simple, then wave B should be complex

Wave equality is a guideline that suggests that when one of the impulse waves is extended, which is usually wave 3, the remaining two impulse waves with a motive wave should be of equal length and duration

Leading and Ending Diagonal Triangles.