Types of Corrections: Zigzags, Flats, Triangles, Combinations

Corrective waves counter the dominant trend, typically unfolding in three main waves labeled A-B-C, and they come in several forms that vary in complexity and duration. Zigzags are sharp, directional corrections with a 5-3-5 internal structure: wave A falls in five sub-waves, B retraces in three (often 50-61.8% of A), and C completes in five, usually equaling A in length. Spot zigzags by their steep, impulsive A and C waves on higher volume than B, often after strong trends, with C reaching 100% or 161.8% of A—look for overlapping sub-waves in B to confirm. They occur in strong trends and signal quick, aggressive reversals, making them ideal for spotting short-term counter-moves.

Flats are milder, sideways corrections with a 3-3-5 pattern: waves A and B are roughly equal in length and corrective, while C ends with an impulsive five-wave drop, often indicating market consolidation before continuation. Identify flats when prices trade in a narrow range after A, with B retracing 90-100% of A on low volume, and C slightly exceeding A’s end—sub-waves in A and B show three-wave structures. They reflect indecision and are common in ranging markets.

Triangles are converging patterns with a 3-3-3-3-3 structure, where waves converge over time, typically appearing as the fourth wave or B wave in larger corrections; they precede final impulsive moves and require patience due to their sideways nature. Recognize triangles by five contracting legs with decreasing volume and volatility, each sub-wave shorter than the previous, forming a symmetrical or expanding shape—use trendlines connecting highs/lows to visualize convergence.

Combinations merge these types (e.g., a zigzag followed by a flat and triangle), creating extended, complex corrections that test trader endurance. Spot combinations when a correction exceeds expected length without clear A-B-C resolution, showing multiple three-wave patterns linked by X waves—volume fades in connecting waves. Recognizing these helps anticipate the trend's resumption—zigzags suggest swift returns, while combinations signal prolonged pauses—improving entry timing.

Sub-Wave Structures: Extensions, Truncations, Failures

Sub-wave structures reveal the internal dynamics of corrective waves, showing how they deviate from standard patterns to signal varying market strength or weakness. Extensions happen when one wave in a correction, usually C in zigzags, lengthens significantly beyond expectations, often reaching 161.8% or 261.8% of A, driven by intense counter-trend sentiment; this creates a more forceful pullback and typically sets up a stronger reversal. Truncations occur when wave C ends short of A’s extreme, common in flats or triangles, indicating fading corrective momentum and an earlier-than-expected trend continuation—prices may stall without full retracement. Failures emerge when the correction doesn't complete its anticipated shape, such as a zigzag where C stops before forming a full impulsive move, hinting at underlying trend resilience and potential immediate breakouts. These structures require vigilant observation; an extension might mimic a new impulse, leading to wrong entries if not identified. Spot extensions by measuring Fibonacci ratios from B, truncations by noting incomplete targets on low volume, and failures by abrupt halts with divergence in indicators. Use them to adjust targets—extensions demand wider stops, while truncations favor aggressive entries—enhancing trade precision in complex corrections.

Wave Degrees and Labeling

Wave degrees and labeling form the backbone of Elliott Wave analysis, allowing you to organize market cycles across different time scales and maintain consistency in your counts, which is crucial for accurate forecasting. Elliott Wave Theory categorizes waves into nine degrees, ranging from the largest Grand Supercycle (spanning centuries) to the smallest Sub-Minuette (minutes or seconds), with each degree containing smaller waves nested inside larger ones. This hierarchical structure means a Cycle wave (years) can include Primary waves (months to years), which in turn hold Intermediate (weeks to months), Minor (days to weeks), Minute (hours to days), Minuette (minutes to hours), and Sub-Minuette (seconds to minutes). The purpose is to provide context: a short-term trade in a Minute wave should align with the direction of the larger Intermediate or Primary wave to increase probability.

Labeling follows a standard convention to avoid confusion. Impulsive waves (1-5) use numerals, while corrective waves (A-B-C) use letters, with degrees indicated by parentheses or brackets for nesting. For example, a Primary wave (1) might contain an Intermediate [1], which includes a Minor 1, down to a Minute (i). Use single parentheses for one level down—e.g., (1) for Minor within Intermediate—and double for further nesting—e.g., ((i)) for Minuette within Minute. Start labeling from the largest visible degree on a weekly or monthly chart, then zoom to daily or hourly for finer details. This multi-timeframe approach ensures your short-term count supports the bigger picture; for instance, buying a Minute wave 3 in an uptrend only if the Primary wave is impulsive.

Challenges in labeling include subjectivity and overlapping degrees, especially in choppy markets where waves appear similar across scales. Overcome this by adhering to core rules: Wave 4 cannot overlap Wave 1's price territory in the same degree, and Wave 3 is usually the longest. Alternate complexity—simple correction after complex impulse—and use Fibonacci ratios for proportion (e.g., Wave 3 often 161.8% of Wave 1). Practice on historical data across assets to build intuition, making degrees and labeling a reliable framework for multi-scale trading.