How to Find Corrective Waves

Findings: Corrective Waves

The corrective wave structure is probably the biggest headache for any Elliottician. The large variation in types of corrective structures is still rather overwhelming for even me following the completion of a five-wave move.

How deep will the retracement be? How long will it last and how complex will it be? There is a bewildering range of potential outcomes that can push a new analyst attempting to learn the principle into finding a more simple method of forecasting. While it can be a deterrent, I find the eventual benefits far outweigh the negatives, and the understanding of how structures develop actually aids the final recognition and awareness of not only when a correction is complete but also when an alternative structure is developing.

With the use of Fibonacci and harmonic ratios and a broad understanding of how these need to slot into the structure of the next higher degree, it is possible to piece together the developing clues as to what will happen next. I would therefore encourage all students of the principal to stick with it and remain determined to conquer the challenges; the benefits are substantial.

Corrective Waves

Let's now have a look at corrective waves.

Zigzags

Zigzags (as shown in Figure 2.1) are the most basic and simple of all corrections. They comprise two counter-trending waves, Wave A and Wave C (that develop in five waves), which are divided by a three-wave structure (or combination of three-wave structures). Quite commonly Elliotticians will refer to these as 535 moves.

This type of move is quite simple to observe, and as long as the two impulsive waves—that is, Wave (A) and Wave (C)—can be identified through observing the five waves, it is unusual to get too confused.

Figure 2.2 shows how a three-wave correction in a Zigzag may look in USDJPY.

Following completion of a simple ABC correction we can expect the main trend to resume.