Bullish 1.13 Extension—The Failed Wave

A simple bullish 1.13 extension is usually preceded by an extended down leg that experiences a quick bounce, only to roll over yet again slightly under the prior low. Although this may be a difficult structure to identify at first, price action in these circumstances is typically void of any distinct harmonic pattern and possesses more of a line segment character. In particular, as the AB price leg completes and begins to decline to the C point, the price action typically will adhere to the general structure (shown in Figure 2.3) and move decisively to the final completion point at the 1.13 extension. As Figure 2.3 demonstrates, the price action quickly violates the initial low point (A) and reverses decidedly thereafter in valid situations.