|
Written and copyright © 2008-2010 by Thomas N. Bulkowski. All rights reserved.
This page describes the flat corrective wave of the Elliott wave principle, how price moves not in a straight line but in
a series of rises and retracements.
Flats come in three types, regular, expanded, and running. This page concerns itself with the regular, 3-3-5 flat
wave. The chart to the right shows a flat, a variety of the ABC corrective wave that
follows a motive wave in a bull market.
Wave B stops near the start of wave A, and wave C stops near the end of
wave A, buy many times terminating just beyond the end of wave A. Stopping close to the end of wave A distinguishes
it from the zigzag wave.
The chart to the right has the same general shape as the preceding chart but with more detail.
It shows the subwaves within the flat correction. The red numbers 1-5
describe the line segments or subwaves within the ABC correction. Wave A is composed of three subwaves as is wave B, but
wave C has five subwaves. That’s where the flat 3-3-5 term comes from. A flat is a term used for any ABC correction
that has 3-3-5 subwaves.
This chart shows the same flat 3-3-5 corrective wave but in a bear market. Waves A and B are threes and wave C is a five.
Wave B ends near where wave A starts and wave C ends near or slightly beyond where wave A ends.
A flat tends to occur when the overall trend is strong, so it almost always precedes or follows an extension.
The more powerful the overall trend, the quicker the flat tends to occur. A flat 3-3-5 wave corrects less of
the prior motive wave than does a zigzag pattern. Within a motive wave, the fourth wave tends to house a flat
but wave two rarely does.
Rules
The three wave corrective phase has rules that govern its shape. They are listed here.
- Corrective waves can head up or down.
- The corrective phase aligns against the trend of one higher degree (a counter trend move).
- Wave B terminates near the start of wave A.
- Wave C terminates near the end of wave A, often slightly beyond the end.
- Wave C does not go much beyond the end of A or the wave is a zigzag.
- Look for a flat to precede or follow a wave extension.
- The more powerful the existing trend, the shorter the flat tends to be.
- You tend to see flats in wave four and not wave two of a motive wave.
-- Thomas Bulkowski
Copyright © 2008-2010 by Thomas N. Bulkowski. All rights reserved. Signs you have a drinking problem: Sincerely believe alcohol to be the elusive 5th food group.
|
. If you buy ANYTHING, they pay for the referral.
on 