This chart, showing the 3rd wave of the S&P bull market (2003) helps to illustrate the role of significance in the count. The small dots count the lower wave scale and the large dots the higher. Some events belong to both wave scales. The chart shows how counts can overlap.
There are 3 sequences here. One, the 18 point, covers the entire trend. The other two are both 14 point counts connected by a scale shift (red box). At this scale the shift would probably be thought of as a 3 wave movement. If you zoom in though, it's a 7. And if you zoom in even further, it itself will also be a low count (14, 18 or 22).
The first 14 pt. sequence extends to the shift. The shift, in effect, prepares the way for a new upward count by counting a full movement down at a much lower scale (hence the name, "scale shift" - if a trader can switch between differnt time and wave scales by changing his chart settings, why can't the market repeat its patterns at any scale it needs to, and in fact it does).
A shift helps price to perform a full count in the desired direction (negative to the last trend) without losing too much ground with regard to price.
After the shift is complete a new upward sequence can begin. Here another 14 plays out and extends slightly beyond the higher scale count, pinpointing the terminal even further.
I don't know about you, but I think it's pretty amazing that a movement that began at 790 and ran to 1160, 370 points, could've been reduced to a terminal area of 3 or 4 points!
Anyway, what signifiance means here is that the largest event that is exclusive to the low wave scale will be smaller or slighter (when measured vertically) than the slightest event that is part of the higher wave scale.
In this way the entire structure 'makes sense.' It is sound from a counting perspective. It succeeds in creating significance and spinning its threads...
Hope that was interesting for you. You are still awake aren't you?...
Later.
fx
