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Complex Correction

Complex Correction The complex correction group consists of 3 patterns :
  1. Flat
  2. Irregular and
  3. Triangle Correction
The trend of this phase need not be downward. This one occurs when the trend of higher degree is bearish. Price corrects the downward move in three segments, upward moves A and C with a correction between, B.

Each segment of the corrective phase can be composed of smaller waves, just as ABC correction has many sub waves. Think of a sub wave as a line segment. Wave A is composed of the 5-3-5-3-5 sequence of sub waves (line segments). Wave B shows 5-3-5. Thus, the ABC correction can be deceptive and difficult to identify especially when additional combinations of corrective waves appear.

Flat Correction

Flat Correction The chart to the right shows a flat, a variety of the ABC corrective wave that follows a motive wave in a bull market.

In a Flat correction, the length of each wave is identical. After a five-wave Impulse Patterns, the market drops in Wave A. It then rallies in a Wave B to the previous high. Finally, the market drops one last time in Wave C to the previous Wave A low.

Wave B stops near the start of wave A, and wave C stops near the end of wave A, buy many times terminating just beyond the end of wave A. Stopping close to the end of wave A distinguishes it from the zigzag wave.

The more powerful the existing trend, the shorter the flat tends to be. Look for a flat to precede or follow a wave extension. You tend to see flats in wave four and not wave two of a motive wave.

Flat Correction wave-lengths

Irregular Correction

Irregular Correction In this type of correction, Wave B makes a new high. The final Wave C may drop to the beginning of Wave A, or below it. Downward Irregular Correction

Fibonacci Ratios in an Irregular Wave
Wave B = either 1.15 x
Wave A or 1.25 x Wave A
Wave C = either 1.62 x
Wave A or 2.62 x Wave A

Elliott wave

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      After every big rally there is profit booking, the profit money is re-invested into the portfolio, and then the market again starts to climb.
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      Each segment composed of smaller waves.
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Triangle Correction

Triangle Correction
In addition to the three-wave correction patterns, there is another pattern that appears time and time again. It is called the Triangle pattern. Unlike other triangle studies, the Elliott wave Triangle approach designates five sub-waves of a triangle as A, B, C, D and E in sequence.

Triangles, by far, most commonly occur as fourth waves. One can sometimes see a triangle as the Wave B of a three-wave correction. Triangles are very tricky and confusing. One must study the pattern very carefully prior to taking action. Prices tend to shoot out of the triangle formation in a swift thrust.

When triangles occur in the fourth wave, the market thrusts out of the triangle in the same direction as Wave 3. When triangles occur in Wave Bs, the market thrusts out of the triangle in the same direction as the Wave A.

Downward Thrust
Upward Thrust
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