22/01/2011 – Basic Wave Patterns: How a Zigzag Differs from a Flat

Excerpted from Lesson 3 of EWI’s
Basic Tutorial

A single zigzag in a bull market is a simple three-wave declining
pattern labeled A-B-C. The subwave sequence is 5-3-5, and the
top of wave B is noticeably lower than the start of wave A,
as illustrated in Figures 1-22 and 1-23.

Figure 1-22 and Figure 1-23

In a bear market, a zigzag correction takes place in the opposite
direction, as shown in Figures 1-24 and 1-25. For this reason,
a zigzag in a bear market is often referred to as an inverted
zigzag.

Figure 1-24 and Figure 1-25

Occasionally zigzags will occur twice, or at most, three times
in succession, particularly when the first zigzag falls short
of a normal target. In these cases, each zigzag is separated
by an intervening “three,” producing what
is called a double zigzag (see Figure 1-26) or triple zigzag.
These formations are analogous to the extension of an impulse
wave but are less common.

Figure 1-26

The correction in the Standard and Poor’s 500 stock index
from January 1977 to March 1978 (see Figure 1-27) can be labeled
as a double zigzag.…Within
impulses, second waves frequently sport zigzags, while fourth
waves rarely do.

Figure 1-27

* * * * *

Excerpted from Lesson 4 of EWI’s
Basic Tutorial

A flat correction differs from a zigzag in that the subwave
sequence is 3-3-5, as shown in Figures 1-29 and 1-30. Since
the first actionary wave, wave A, lacks sufficient downward
force to unfold into a full five waves as it does in a zigzag,
the B wave reaction, not surprisingly, seems to inherit this
lack of countertrend pressure and terminates near the start
of wave A. Wave C, in turn, generally terminates just slightly
beyond the end of wave A rather than significantly beyond as
in zigzags.

Figure 1-29 and Figure 1-30

In a bear market, the pattern is the same but inverted, as
shown in Figures 1-31 and 1-32.

Figure 1-31 and Figure 1-32

Flat corrections usually retrace less of preceding impulse
waves than do zigzags. They participate in periods involving
a strong larger trend and thus virtually always precede or
follow extensions. The more powerful the underlying trend,
the briefer the flat tends to be. Within impulses, fourth waves
frequently sport flats, while second waves do so less commonly.

What might be called “double flats” do occur. However, Elliott categorized
such formations as “double threes,” a term we discuss
in Lesson 9.

The word “flat” is used as a catchall name for any A-B-C correction
that subdivides into a 3-3-5. In Elliott literature, however, three types of
3-3-5 corrections have been identified by differences in their overall shape.
In a regular flat correction, wave B terminates about at the level of the beginning
of wave A, and wave C terminates a slight bit past the end of wave A, as we have
shown in Figures 1-29 through 1-32. Far more common, however, is the variety
called an expanded flat, which contains a price extreme beyond that of the preceding
impulse wave. Elliott called this variation an “irregular” flat, although
the word is inappropriate as they are actually far more common than “regular” flats.