Elliott Wave Free Forex Signal

Corrective Waves.

These are the waves that, by definition, go against the trend. They connect the impulse waves. Unfortunately, there are four different types of corrective wave. Corrective waves are labeled with letters.

A-B-C Corrective Waves
Wave A: Correction To Rally – Initially Wave A may appear to be a correction to the normal rally. However, if it breaks down into five
subwaves, it indicates that a new market trend may have developed.
Wave B: Bear Market Correction – Wave B tends to give bears an opportunity to sell as others take profit on their short trades or exit
their long positions.
Wave C: Confirms End Of Rally – Wave C is the last wave of the cycle. At this point, Wave 3 typically breaks key support zones and
most technical studies confirm that the rally has ended.

The most simple or straightforward corrective pattern is the zig-zag. The pattern is a simple A-B-C pattern and tends to do more damage to the preceding trend than other corrective waves. Waves “A” and “C” are the trend moves and, therefore, are five-wave structures, while wave “B” is a three-wave pattern that retraces only part of the “A” wave. Thus, the A-B-C is an internal 5-3-5.

The flat is an A-B-C pattern that trends mostly in a sideways fashion (therefore, doing less damage to the underlying trend). The “A” and “B” waves are three wave structures, while the “C” wave is an impulsive pattern. Thus, the A-B-C is an internal 3-3-5. Unlike the zig-zag, the “B” wave often ends at or beyond the start of the “A” wave.

Nominally, there are four different kinds of triangle (symmetrical, expanding, ascending, and descending). Nonetheless, they all occur in the penultimate position prior to the final movement of the larger trend. Thus, triangles typically occur as a fourth wave or as a “B” wave. Structurally, the pattern is labeled “A-B-C-D-E” and each of those legs is made up of three waves. Thus, the A-B-C-D-E is an internal 3-3-3-3-3. The contracting triangle is shown below.

A zig-zag and a flat (and even a triangle) can be referred to as a “single three”. However, there are less common and more complex patterns known as double or triple threes. They are a combination of single threes that are joined by a connecting “X” wave. Double threes are made up of seven waves (A-B-C-X-A-B-C), while triple threes have 11 waves (A-B-C-X-A-B-C-X-A-B-C). A double-three is shown here:

By now, it is probably fairly obvious that, especially when compared to the straightforward five-wave impulse wave, corrective waves can be extremely confusing and can confound even the most experienced analyst. As a result, the analyst is advised not to use Elliott in isolation.

Next topic we will discuss about Wave Count Rules.

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