In our previous posts, we presented the alternation principle, different simple corrective structures. Also, we showed different trading setups for each corrective pattern. In this opportunity, we’ll talk about strength and complex corrective waves.
Strength and Corrections
The structure of a corrective pattern provides a piece of useful information for the next path. It’s important to consider that the correction pattern must be complete before to make a price projection. The following chart shows the corrective sequence and the strength of the next move.
The Complex Corrective Wave
Elliott defined a basic (or simple) type of correction which includes three waves. Also, he introduced the complexity in corrective waves. The complex correction could be a combination of two or three simple structures. In summary, the corrective structures are: “simple 3”, “double 3”, and “triple 3”. It means that a complex corrective structure could have 7 or 11 waves.
The Alternation in Corrective Waves
We mentioned before that alternation is a nature’s law. In corrective waves, it can be in size and time; in larger structures could take place in different ways. For example, if the first move (wave A) is a zigzag; the recovery (wave B) should be an inverted flat. The second case is, if wave A is a flat, wave B should be an inverted zigzag. The two models have in common that wave C will have five waves.
To complement this reading, you can visit our post “How to use channels to identify waves”.