Expanded Flat Corrections

Expanded Flat Corrections

In stronger trending moves the market sentiment is particularly bullish so that after an initial three-wave correction (to Wave efa) price resumes in the direction of the prior impulsive wave but extends beyond the end of the first move to Wave efb. This move also comes in three waves (or a more complex corrective structure) before reversing in Wave efc to the original area around Wave efa (see Figure 2.11). It can fall a little short of Wave efa or indeed overshoot a little.

Similar to Flat Corrections, the Expanded Flat can occur in any Wave 2, Wave 4, Wave B, or Wave X (see Figure 2.12).

Figure 2.12 An Expanded Flat Correction in Wave x within a Triple Three Correction in EURUSD

Recalling the example of the Triple Three in Figure 2.6, there was a Wave x that actually saw the Wave b extending below the low of the last Wave c. It is not too easy to see the three-wave move in Wave efa but it is very clear in Wave efb. Finally price rallied back to a few points short of Wave efa before the final ABC structure developed and ended at 1.4480.