What are corrective waves in Elliott Wave?

    Quick Answer

    Corrective waves are 3-wave patterns (labeled A-B-C) that move against the main trend direction.

    Detailed Explanation

    In Elliott Wave Theory, corrective waves are counter-trend movements that unfold in three waves, labeled A-B-C. They correct or retrace a portion of the preceding impulse wave. Corrections can take various forms including zigzags, flats, triangles, and complex combinations. Understanding corrections helps traders identify when the main trend will resume.

    Key Points

    • 13-wave structure (A-B-C)
    • 2Move against the main trend
    • 3Common forms: Zigzag, Flat, Triangle
    • 4Typically retrace 38.2%, 50%, or 61.8%
    • 5Can be complex (W-X-Y combinations)

    Example

    After a 5-wave rally from $100 to $200, an A-B-C correction might drop to $162 (38.2% retracement) before the next impulse begins.

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