Right, good question. So my understanding is that the rule you stated is correct. However if you take a closer look at the chart you'll notice that the wicks are primarily causing the issue of 1 & 4 over lapping. Also this chart is from an exchange where trader can enter at leveraged positions so this chart is from a margin trading trading account. My understanding is those markets behave a little different.
RE: Bitcoin (BTC) Evening Update: Wave 3 Could be Complete
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Bitcoin (BTC) Evening Update: Wave 3 Could be Complete