ASX Charting Course

Chapter 35

The Elliot Wave Theory

Variations

Triangle Correction

A triangle correction is made up of five waves labelled as an ‘a-b-c-d-e’ type correction having 3-3-3-3-3 sub waves. There are four variations: ascending, descending, contracting and expanding.

Diagram 53

The above diagram is an example of an ascending horizontal triangle. It has a flat top and a rising bottom. The other variations are descending, contracting and expanding, which should be self explanatory. The important thing to look for is the 3 wave sub-count within each wave of the triangle.

Double threes and triple threes

A single three is any zigzag or flat consisting of three basic waves A-B-C. Double threes are as the name implies a combination of two threes, two zigzags or two flats. Triple threes are yet another three tacked on. The intermediate wave is referred to as an X wave.

Diagram 54

The example above is a double three made up of two flat corrections.

Complex Combinations

It is important to keep in mind which particular degree of complexity the structure is in. A correction may start off as a simple flat correction as in the example below (see diagram 55) the first a-b-c is merely the A part of the correction.

It’s not until the C leg breaks below wave a of B, that we can actually say that the centre three wave, B wave, is complete and we can then look for a C wave decline. The C leg can be a 3 or 5 wave decline, as it is against the underlying trend of the market.

Diagram 55

During any correction the waves in the same direction as the underlying trend are always in 3’s while the counter move waves, against the trend can be either 3 wave or 5 wave legs.