Wave c in zigzag
Based on Elliott Wave Theory, a correction occurs after a motive phase, with the initial signs of a Zigzag correction identified. Wave A of a zigzag will always consist of five subwaves. Spotting three subwaves after the five in wave A, generating wave B, means that wave C will naturally follow with another set of five subwaves. This pattern—five subwaves in A, three in B, and then five in C—represents a complete zigzag correction. Wave C’s impulse provides an effortless trading opportunity because this predictable pattern helps traders forecast the market’s direction, allowing them to profit from the movement signaled by these sequences.
In Short
Zigzag Corrective Wave
The zigzag corrective pattern features a simple 5-3-5 repetition. Once the market has completed the initial 5–3 phase, you can easily enter trades during the subsequent set of five sub waves. The pattern comprises a five-wave movement, a brief three-wave countertrend, and a further five-wave advance in the original direction. It provides traders with a clear opportunity to forecast market movements and make decisions based on the expected completion of the last five-wave section.
Bitcoin/Daily Chart
C Wave Correction in Zigzag
The C-wave correction in the zigzag pattern is a natural impulse pattern. It has all of the conditions commonly found in an impulsive wave. It may also include a large rally.
Typically, in an impulse, we aim for Wave 3 to be at least 161% longer than Wave 1. This means that Wave 3 showing strong movement and faster trends in the Elliott Wave pattern.
How to Trade in Wave C in Zigzag
Analyzing Chart
As we examine trading in Wave C within a Zigzag correction, we will look at the Bitcoin chart below. It is possible that Wave B may end in March 2022. Then the focus changes to whether sub wave 1 of wave C occurred or not.
When trying to find a trade opportunity, you always begin by asking yourself one basic question: ‘Do I recognize Wave 1?‘ If the answer is yes, it’s time to look further into the price chart. If the answer is no, it’s time to quickly move to a different chart.
In the Bitcoin chart, from mid-to-late April 2022, a flat correction in sub wave 2 is observable. Wave 2 ended at 43343.
Bitcoin/4H Chart
Trading Plan
A trade entry should be considered when the Wave 2 correction retraces between 38 and 50 percent (Fibonacci Levels) of Wave 1. If the price crosses Wave 1’s level, one could confirm the trade entry by shorting. In this scenario, shortly after Wave 2’s correction, the price quickly crossed Wave 1’s level of 39918.
The target is simple: at least 161 percent. On the price chart, it is at 28586. The price quickly met and reached its target.
Risk Management
If an entry is taken at the retracement of Wave 2, the initial stop loss could be placed at the starting point of Wave 1, which would be at 47995. If the price reaches the lowest point of Wave 1, which is 53343 points on the chart, the stop loss may be trailed at the end of Wave 2. Similarly, we could use trailing stop losses to correct Wave 3’s sub waves 2 and 4. In such circumstances, being patient could result in enormous profit opportunities.
Target of Wave C
In Elliott Wave Theory, the target for Wave C frequently follows the principle of equal length with Wave A, indicating that Wave C may travel a comparable distance as Wave A. Alternatively, traders may consider Wave A’s 127% prediction as the next likely objective for Wave C.
Identifying the minimum target for Wave C allows us to readily spot profitable positions on the chart. This enables us to anticipate probable price fluctuations and tactically book profits using the Elliott Wave methodology.
Final Thoughts
Identifying wave patterns and prospective targets allows traders to properly discover profitable opportunities and negotiate the complexities of market movements. Traders can enhance their trading success within the Zigzag corrective framework by conducting thorough analysis and making strategic decisions on Wave C movements.
FAQs
What is the target of wave C?
The target of Wave C in Elliott Wave Theory is determined by the principle of equality in length between Wave C and Wave A, implying that Wave C is expected to reach a similar distance. Alternatively, another target considered is the 127 percent projection of Wave A. These factors determine the potential length of Wave C within the Elliott Wave pattern.
Can wave C be longer than wave A?
Yes, Wave C can go beyond the length of Wave A in Zigzag correction. While the principle of equality in length suggests that Wave C frequently matches the distance covered by Wave A, market dynamics may sometimes cause Wave C to exceed Wave A in length. Market emotion, fundamental changes, and unforeseen occurrences may all contribute to Wave C's elongation, emphasizing the fluid nature of market movements within the Elliott Wave framework.
Disclaimer
This post is just for informative purposes and does not constitute financial advice. Trading and investing involve risk, and past performance does not guarantee future results. Before making an investing or trading choice, readers should undertake their own research and evaluate their own circumstances. The author and platform accept no responsibility for any financial losses or damages stemming from the use of this material. Receive personalized advice from a qualified financial advisor.
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