Wave Two is a retracement of Wave One.  It's low is a function of new buyers coming into the  market and traders who are covering their latest  trades made at the end of Wave One.

Wave C of Wave Two is often extremely  powerful. There is uncertainty as to  market direction at this point, and the  participants are keen to maintain their profits.

The end of Wave 2 occurs without making a new  extreme and is the beginning of a new trend in  the opposite direction.