As of 04/24/2024   Indus: 38,461 -42.77 -0.1%     Trans: 15,078 -358.61 -2.3%     Utils: 893 +6.79 +0.8%     Nasdaq: 15,713 +16.11 +0.1%     S&P 500: 5,072 +1.08 +0.0%	YTD  +2.0%   -5.2%    +1.3%    +4.7%    +6.3%	Targets    Overview: 04/12/2024     39,800 or 37,150 by 05/01/2024   16,200 or 15,000 by 05/01/2024   885 or 850 by 05/01/2024   16,700 or 15,800 by 05/01/2024   5,250 or 5,025 by 05/01/2024
Chart Pattern Indicator: on 4/23/24

As of 04/24/2024   Indus: 38,461 -42.77 -0.1%     Trans: 15,078 -358.61 -2.3%     Utils: 893 +6.79 +0.8%     Nasdaq: 15,713 +16.11 +0.1%     S&P 500: 5,072 +1.08 +0.0%	YTD  +2.0%   -5.2%    +1.3%    +4.7%    +6.3%
Targets    Overview: 04/12/2024     39,800 or 37,150 by 05/01/2024   16,200 or 15,000 by 05/01/2024   885 or 850 by 05/01/2024   16,700 or 15,800 by 05/01/2024   5,250 or 5,025 by 05/01/2024
Chart Pattern Indicator: on 4/23/24

Bulkowski on Corrective Elliott Wave Pattern

This page describes the corrective phase of the Elliott wave principle, how price moves not in a straight line but in a series of rises and retracements.

Shown is the three wave corrective phase (as opposed to the five wave motive phase) of the Elliott wave principle. Price moves in a rise-retrace pattern that is similar to an incoming tide. The corrective phase retraces a portion of the prior up move that was powered by the motive phase.

The chart shows a corrective wave when the trend of higher degree is bullish.

A corrective phase can come in a variety of flavors. General categories are: zigzag, flat, triangle, or combination, and all of these can come in two styles: sharp or sideways corrections. A sharp correction is just like it sounds, moving quickly against the larger trend. A sideways correction is more sedate. It is a correction, but price tends to move horizontally over time whereas a sharp correction is more vertical.

The trend of the corrective phase need not be downward as the accompanying chart shows. This one occurs when the trend of higher degree is bearish. Price corrects the downward move in three segments, upward moves A and C with a correction between, B.

Each segment of the corrective phase can be composed of smaller waves. The figure to the right shows an example. Notice how the ABC correction has many sub waves. Think of a sub wave as a line segment. Wave A is composed of the 5-3-5-3-5 sequence of sub waves (line segments). Wave B shows 5-3-5. Thus, the ABC correction can be deceptive and difficult to identify especially when additional combinations of corrective waves appear.

Corrective Elliott Wave: Rules

The three wave corrective phase has rules that govern its shape. They are listed here.

• The corrective phase is composed of three waves and never five.
• Corrective waves can head up or down.
• The corrective phase aligns against the trend of one higher degree (a counter trend move).
• Tip: An initial five wave move against the prevailing price trend is not the end of a correction.

-- Thomas Bulkowski

See Also

• Here is the main resource for Elliott wave information.
• Support and resistance. Learn the various types.
• Market direction. 7 tips to determining.
• Trading cycles help time your entries and exits.
• Trend change detection using a triangle apex.

 

Support this site! Clicking any of the books (below) takes you to Amazon.com If you buy ANYTHING while there, they pay for the referral.
Legal notice for paid links: "As an Amazon Associate I earn from qualifying purchases."

My Stock Market Books Invest for Two-Comma Wealth   Chart Patterns: After the Buy Encyclopedia of Chart Pattern, 3rd Edition Fundamental Analysis and Position Trading Getting Started in Chart Patterns, 2nd Edition Swing and Day Trading Trading Basics

My Novels Training Miles   Bumper's Story Head's Law Remember Me

Copyright © 2005-2024 by Thomas N. Bulkowski. All rights reserved.

Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

Some pattern names are registered trademarks of their respective owners.

Home Advertise Contact Donate Privacy/Disclaimer ☰

In America, anyone can be president. It's one of the risks you take.