🔹Corrective Patterns

Corrective Patterns

A corrective wave comes after an impulsive move/wave. We have talked in brief about corrective pattern in our previous lessons: “Patterns”, “Wave Pattern…” and “Price swings”. However, these corrective waves come in different forms and knowing these forms greatly helps in predicting the next impulsive move which we would want to trade. So, let us now get familiar with the different patterns of Corrective waves as per Elliott wave Theory.

Types of Corrective Patterns

  1. Zigzag

  2. Flats (Regular, Expanding, Running),

  3. Triangles

  4. Combinations

Zigzag

Pattern Rules

  1. A zigzag always subdivides into three waves

  2. Wave A always subdivides into an impulse or leading diagonal.

  3. Wave C always subdivides into an impulse or diagonal

  4. Wave B always subdivides into a zigzag, flat, triangle or combination thereof

  5. Wave B never moves beyond the start of wave A.

zigzag in an uptrend

zigzag in a downtrend

Labelling is always done at the end of every wave.

Guideline for zigzag

  1. Wave A almost always subdivides into an impulse.

  2. Wave C almost always subdivides into an impulse.

  3. Wave C is often about the same length as wave A.

  4. Wave B typically retraces 38 to 79 percent of wave A.

  5. If wave B is a running triangle, it will typically retrace between 10 and 40 percent of wave A.

  6. If wave B is a zigzag, it will typically retrace 50 to 79 percent of wave A.

  7. If wave B is a triangle, it will typically retrace 38 to 50 percent of wave A.

  8. A line connecting the ends of Wave A and C is often parallel to a line connecting the end of Wave B and the start of Wave A. (Forecasting guideline: Wave C often ends upon reaching a line drawn from the end of Wave A that is parallel to a line connecting the start of wave A and the end of wave B).

Zigzag ( in an uptrend )

Flat

pattern Rules

  1. A flat always subdivides into three waves

  2. Wave A is never a triangle

  3. Wave C is always an impulse or diagonal

  4. Wave B always retraces at least 90 percent of wave A.

  5. There are 3 types of flats ; Regular, Expanded and Running

  6. In a regular flat correction, wave B terminates about at the level of the beginning of wave A, and wave C terminates a light bit past the end of wave A, as shown in the figure here.

Flat (Regular) in a downtrend

Flat (Regular) in an uptrend

Guidelines

  1. Wave B usually retraces between 100 and 138 percent of wave A.

  2. Wave C is usually between 100 and 165 percent as long as wave A.

  3. Wave C usually ends beyond the end of Wave A

Expanded Flat pattern

When wave B is more than 105 percent as long as wave A and wave C ends beyond the end of wave A, the entire formation is called an expanded flat

Running Flat pattern

When wave B is more than 100 percent as long as wave A and wave C does not end beyond the end of wave A, the entire formation is called a running flat.

Running flat in an uptrend

Remember the trending mode? uptrend: low (L), high (H), higher low (HL) and higher high (HH); downtrend: high (H), low (L), lower high (LH) and lower low (LL). which pattern/s has/have trending mode below?

Triangle patterns

Rules of Contracting Triangle

  1. A Triangle always subdivides into five waves.

  2. At least four waves among waves A, B, C, D and E each subdivide into zigzag or zigzag combination

  3. Wave C never moves beyond the end of wave A, wave D never moves beyond the end of wave B and wave E never moves beyond the end of wave C. The result is that going forward in time, a line connecting the ends of waves B and D converges with a line connecting the ends of waves A and C

  4. A triangle never has more than one complex subwave, in which case it is always a zigzag combination or a triangle.

Contracting Triangle in an uptrend

Contracting Triangle downtrend

Guidelines of Contracting Triangle

  1. Usually, wave C subdivides into a zigzag combination that is longer lasting and contains deeper percentage retracements than each of the other subwaves.

  2. Sometimes, wave D subdivides into a zigzag combination that is longer lasting and contains deeper percentage retracement than each of the other subwaves

  3. Sometimes one of the waves, usually wave C, D or E subdivides into a contracting or barrier triangle. Often the effect is as if the entire triangle consisted of nne zigzags.

  4. About 60 percent of the time, wave B does not end beyond the start of wave A. When it does, the triangle is called a running triangle.

Barrier Triangle pattern Guidelines

  1. A barrier triangle has the same characteristics as a contracting triangle except that wave B and D end at essentially the same level.

  2. When wave 5 follows a triangle, it is typically either a brief, rapid movement or an exceptionally long extension.

Expanding Triangle Pattern Rules

  1. Most rules are the same for contracting triangles, with these differences:

  2. Wave C, D and E each move beyond the end of the preceding same-directional subwave.

  3. Subwaves B, C and D each retrace at least 100 percent but no more than 150 percent of the preceding subwave.

Guidelines for Expanding Triangle

Most guidelines are the same, with these differences:

  1. Subwaves B, C and D usually retrace 105 to 125 percent of the preceding subwave.

  2. No subwave has yet been observed to subdivide into a triangle.

Expanding Triangle in an Uptrend

  1. Combinations corrective pattern

Rules of combination pattern

  1. Combinations comprise two or three corrective patterns separated by one or two corrective patterns in the opposite direction, labeled X. (The first corrective is patter is labeled W, the second Y, and the their, if there is one, Z)

  2. A zigzag combination comprises two or three zigzags (in which case it is called a double or triple zigzag)

  3. A “double three” flat combination comprises (in order) a zigzag and a flat, a flat and zigzag, a flat and a flat, a zigzag and a triangle or a flat and a triangle.

  4. A rare “triple three” flat combination comprises three flats.

  5. Double and triple zigzags take the place of zigzags, and double and triple threes take the place of flats and triangles.

  6. An expanding triangle has yet to be observed as component of a combination

Guidelines

When a zigzag or flat appears too small to be the entire wave with respect to the preceding wave (or, if it is to be wave 4, the preceding wave 2), a combination

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