Wave C
Wave C is the final wave of a corrective A-B-C sequence. It always subdivides into five waves, which gives it an impulsive character even though it is part of a correction. Wave C is typically the most powerful and dynamic part of any corrective phase. In terms of length, Wave C often equals Wave A measured in price distance. When the correction is particularly strong, Wave C can extend to 161.8% of Wave A. This Fibonacci relationship is one of the most reliable targeting tools in Elliott Wave analysis. Wave C is where the majority of corrective damage occurs. It is where stops get hit, margin calls happen, and sentiment reaches extremes. For counter-trend traders, Wave C completions offer some of the best entry points available. You are buying at the end of a five-wave decline into a Fibonacci target with sentiment washed out. The risk-to-reward at the end of Wave C is often exceptional because the next move is Wave 1 of a new impulse in the opposite direction.
Tesla drops from $280 to $240 in Wave A, a $40 decline. Wave B rallies back to $270. Wave C then begins and you project two targets: $230 (equality with Wave A, a $40 drop from $270) and $205 (161.8% of Wave A). Price falls to $228, just above the equality target. RSI hits oversold, the five-wave internal count completes, and the stock reverses sharply. A trader who set a limit buy at $230 with a stop at $200 captures the reversal with a clearly defined risk level.