Zigzags, flats and triangles
When a market starts moving against the main trend it often does so only with a substantial degree of effort. This is why one would normally see a movement in the direction of the trend, i.e. an impulse wave, to be clearly distinguishable. This is not always the case with waves that move in the opposite direction, i.e. corrective waves.
It comes as no surprise, therefore, that one finds a wider variety of corrective waves than impulse waves. Usually we place corrective waves in four categories, Zigzags, Flats, Triangles and Combined Structures.
A zigzag can either be a single, a double or a triple. A flat can either be a regular, an expanded flat or a running flat, while a triangle can take four forms, an ascending or descending triangle or a contracting or expanding triangle. Combined structures usually come in groups of double-threes and triple-threes.
Fig. 1.1 is an example of the simple zigzag corrective wave one would expect to see in a bull market. It is a simple three wave pattern with the top of wave three being noticeably below the starting level of wave A.
Fig. 1.2 is an example of what a zigzag would often look like in real life, with waves A and C consisting of five sub-waves each, three of which are in the direction of the main trend and two against the trend. Wave B consists of three sub-waves.
Now and again a zigzag will occur more than once. A double zigzag is not uncommon, but it is very seldom that one sees a triple zigzag pattern. This mostly happens when the first zigzag does not meet its target. Fig. 1.3 is an example of a double zigzag pattern.
A flat corrective wave differs from other corrective waves in that the sub-wave pattern is 3-3-5, as can clearly be seen in Fig. 1.5. The first actionary wave, wave A in Fig. 1.4 and Fig. 1.5, does not have enough downward force to develop into a five-wave pattern such as we have seen in Fig. 1.2. Instead it forms a three sub-wave pattern, as in Fig. 1.5.
The corrective wave B appears to inherit this uncertainty and it ends near the starting point of wave A. Wave C also lacks sufficient force to go far below the bottom of wave A, so what we see is a pattern such as in Fig. 1.4 and 1.5.
Flat corrections normally do not retrace the same amount as their zigzag counterparts, instead they nearly always follow or precede extensions. The stronger the underlying trend, the shorter the flat would normally be. It is not uncommon to find flats in the fourth, corrective, wave of a five wave Elliott wave pattern.
Expanded flat corrections
What we can see in Fig. 1.4 and Fig. 1.5 are called regular flat corrections, however, an expanded flat correction is actually more common. Examples of the latter can be seen in Fig. 1.6 and Fig. 1.7.
Triangles seem to be a reflection of a balance in the marketplace, so it comes as no surprise that they cause a sideways price movement, usually associated with decreasing volatility and volume. A triangle consists of five overlapping waves that can, in turn, each be subdivided into three sub-waves. The triangle is formed when we connect the points where waves (a) and (c) and (b) and (d) ended. Wave (e) can and often does, overshoot the (a-c) line.
There are two types of triangles, expanding and contracting. While there is only one type of expanding triangle, there are three types of contracting triangles: ascending, descending and symmetrical.
Ascending, descending and contracting triangles
In Fig. 1.09 one can clearly see the ascending bottoms, while the tops remain flat. Fig. 1.10 is characterised by descending tops, with the bottoms remaining flat and in Fig. 1.11 we have descending tops and ascending bottoms.
Although, in extremely unusual circumstances, we might see the second wave in a five wave Elliott pattern take the form of an impulse, it is much more common for this to happen in wave four, which is the corrective wave just before the final actionary wave.
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