Wave count invalidation
What price would prove a wave count wrong, and why should that price be stated in advance?
In plain words
Wave count invalidation is the price level at which the labels given to a market's successive swings up and down must be abandoned. The counting rules fix it in advance, for example that one swing may not trade past the start of the move it is said to label.
Why it matters
Without a stated invalidation, any pattern can be relabelled after the fact and never tested. Naming the price first turns a wave count into a falsifiable reading, and fixes where the analysis is known to have failed rather than merely looking wrong.
In a real week: ETH, week of 15 August 2022
ETH closed up in each of the four weeks before 15 August 2022 (19.35%, 5.03%, 1.32%, 13.83%). A count reading those as swings higher requires a price below where that advance began. In the week of 15 August, ETH fell 16.39%, reaching 2012.47 on Monday at 03:00 UTC and a low of 1523.67 on Saturday 20 August at 21:00 UTC, closing at 1618.13, in the lower third of the week range and 66.61% below the 52-week high. Any invalidation level inside that week's range was traded through, discarding the count.
A common mistake
Lowering the invalidation level once price reaches it, which turns a testable claim into a sequence of after-the-fact relabelings that can never fail.