How To Trade When The Market ZIGZAGS: The E-Learning Series For Traders

How to Trade When the Market ZIGZAGS
The e-learning Series for Traders

Presented by Wayne Gorman, Senior Tutorial Instructor
Elliott Wave International
P.O. Box 1618, Gainesville, GA 30503 USA
800-336-1618 or 770-536-0309
Fax 770-536-2514
www.elliottwave.com
2006 Elliott Wave International
Video Directory
1.00 Introduction
2.00 Characteristics of Zigzags
3.00 Rules, Guidelines, and
Fibonacci Relationships
4.00 XAU Index Trading Scenarios
Part 1: Identifying Wave A
Part 2: Trading Wave B
Part 3: Trading Wave C
5.00 Dow Chemical Trading Scenarios
6.00 Summary
1.01
What You Will Learn
Key structural characteristics of zigzags
Actionary versus reactionary functions
How to anticipate when zigzags will occur
Rules, Guidelines, and Fibonacci ratios that govern
subdivisions
How to set entry, stop, price target and exit levels
when trading zigzags
1.02
1.03
Corrective Waves Summary
A B C D E Shape Position
Zigzag 5 3 5 Sharp Wave 2
Flat 3 3 5 Sideways Wave 4
Triangle 3 3 3 3 3 Sideways Wave 4
Combination X wave Sideways Wave 4
Normal
1.04
Zigzag (535)
Wave A B C
Subdivisions 5 3 5
General Shape Sharp
Normal Wave Position Second Wave
1.05
Zigzag
1.06
Flat
1.07
Triangle
1.08
Combination
1.09
Zigzag
1.10
Characteristics of Zigzags
2.00
Single Zigzag
Bull Market
Bear Market
2.01
Double Zigzag
Bull Market
2.02
Triple Zigzag
Bull Market
2.03
MODE versus FUNCTION
Every wave has both a mode and a function.
2.04
MODE Construction
1. Motive: Five-wave Structures
(Impulse, Diagonal Triangle)
2. Corrective: Three-wave Structures
(Zigzag, Flat, Triangle, Combination)
2.05
FUNCTION Role, Purpose
1. ACTIONARY (TREND):
2. REACTIONARY (COUNTERTREND):
Every wave either advances the cause of the wave at one larger
degree of which it is a part, or interrupts it.
Advance the Cause
Interrupts
An actionary wave is any wave that trends in the same direction as the
wave of one larger degree of which it is a part.
Wave labels are: 1, 3, 5, A, C, E, W, Y and Z
A reactionary wave is any wave that trends in the opposite direction of
the wave of one larger degree of which it is a part.
Wave labels are: 2, 4, B, D and X
2.06
Combining MODE and FUNCTION
All waves that develop in motive mode are actionary waves.
All reactionary waves develop in corrective mode.
Not all actionary waves develop in motive mode.
Not all waves that develop in corrective mode are reactionary.
Some waves that develop in corrective mode are actionary and are
called actionary corrective.
Motive waves powerfully impel the market in the same direction as the
wave of one larger degree of which it is a part.
These are corrective waves that interrupt the main trend by moving in the
opposite direction as the wave of one larger degree of which it is a part.
Best Example: Zigzags
2.07
ZIGZAG Corrective Mode
ACTIONARY FUNCTION:
Waves 1, 3 and 5 in diagonal triangles
Wave A of a flat correction
Waves A, C and E of a triangle
Waves W and Y of a double zigzag and double three
Wave Z of a triple zigzag and triple three
REACTIONARY FUNCTION:
Waves 2, 4, B, D and X
2.08
Impulse Waves
2.09
Diagonal Triangles
2.10
Flat
2.11
Triangle
2.12
Zigzag
2.13
Double Zigzag
Bull Market
2.14
Combination
2.15
1
5
4
3
2
1
C
B
A
5
4
3
2
(3)
(4)
(5)
2.16
8
1
2
(ii)
(i)
(i)
(iii)
(ii)
(iv)
(iii)
(v)
(v)
(iv)
(a)
(b)
(c)
b
9
0
c
a
7
6
2.17
2
1
(1)
1
(2)
(3)
(4)
(5)
(A)
(B)
(C)
3
4
A
5
B
C
1
2
3
5
4
2
2.18
a
b
B
c
2.19
3
4
2.20
3
4
b
(i)
(a)
(ii)
(iii)
(iv)
(v)
(b)
(c)
(i)
(ii)
(iii)
(iv)
(v)
a
c
2.21
(3)
(4)
A
B
C
D
E
2.22
(3)
(4)
A
B
C
D
E
w
(a)
(b)
(c)
(a)
(b)
(c)
(a)
(b)
(c)
y
x
a
b
c
a
c
a
b
c
a
b
c
b
2.23
c
a
b
Y
W
c
B
(E)
w
x
y
a
b
X
2.24
a
b
c
W
b
c
a
b
c
a
b
Y
(4)
c
Z
X
a
a
b
X
c
2.25
2.26
Rules, Guidelines, and Fibonacci Relationships
for Zigzags
3.00
Rules
A zigzag always subdivides
into three waves.
Wave B never moves beyond
the start of wave A.
3.01
Rules
Wave A always subdivides
into an impulse or leading
diagonal.
Wave C always subdivides
into an impulse or diagonal
triangle.
3.02
Rules
Wave B always subdivides into a zigzag,
flat, triangle or combination.
3.03
Guidelines
Wave A almost
always subdivides
into an impulse.
Wave C almost
always subdivides
into an impulse.
Wave C is often
the same length as
Wave A.
Wave C
almost always
ends beyond
the end of
wave A.
3.04
Guidelines
Channeling
Wave C often ends upon reaching
the extreme of the channel.
3.05
Guidelines for Typical Retracements
of Wave A by Wave B in Zigzags
Wave B Net Retracement (%)
Zigzag 50-79
Triangle 38-50
Running Triangle 10-40
Flat 38-79
Combination 38-50
3.06
Single Zigzag
Wave A = Wave C
Wave C = .618 Wave A
Wave C = 1.618 Wave A
Wave C = .618 Wave A past Wave A
Double Zigzag
Wave W = Wave Y
Wave Y = .618 Wave W
Wave Y = 1.618 Wave W
Wave Y = .618 Wave W past Wave W
Triple Zigzag
Equality for W, Y and Z
Ratio of .618, i.e.
Wave Z = .618 Wave Y or Wave Y = .618 Wave W
Wave Z = .618 Wave Y past Wave Y
3.07
Trading Scenarios
XAU Index
Part 1: Identifying Wave A
4.00
4.01
4.02
4.03
4.04
4.05
4.06
4.07
4.08
4.09
4.10
4.11
Trading Scenarios
XAU Index
Part 2: Trading Wave B
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20
4.21
4.22
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
4.34
4.35
4.36
Trading Scenarios
XAU Index
Part 3: Trading Wave C
4.37
4.38
4.39
4.40
4.41
4.42
4.43
4.44
4.45
4.46
4.47
4.48
4.49
4.50
4.51
4.52
4.53
4.54
4.55
4.56
4.57
4.58
4.59
4.60
4.61
Trading Scenarios
Dow Chemical
5.00
5.01
5.02
5.03
5.04
5.05
5.06
5.07
5.08
5.09
5.10
5.11
5.12
5.13
5.14
5.15
5.16
5.17
5.18
5.19
5.20
5.21
5.22
5.23
5.24
5.25
5.26
5.27
5.28
Course Summary
6.00
Zigzag
6.01
Single Zigzag
Bull Market
Bear Market
6.02
Double Zigzag
Bull Market
6.03
Triple Zigzag
Bull Market
6.04
ZIGZAG Corrective Mode
ACTIONARY FUNCTION:
Waves 1, 3 and 5 in diagonal triangles
Wave A of a flat correction
Waves A, C and E of a triangle
Waves W and Y of a double zigzag and double three
Wave Z of a triple zigzag and triple three
REACTIONARY FUNCTION:
Waves 2, 4, B, D and X
6.05
Trading Scenarios
Corrections can never be 5s.
If wave A has five waves, the corrective structure must be a zigzag.
Wave B never moves beyond the start of wave A.
Wave C almost always ends beyond the end of wave A.
6.06
Trading Scenarios
Single Zigzag
Wave A = Wave C
Wave C = .618 Wave A
Wave C = 1.618 Wave A
Wave C = .618 Wave A past Wave A
6.07
Trading Scenarios
Guidelines for Typical Retracements
of Wave A by Wave B in Zigzags
6.08
Wave B Net Retracement (%)
Zigzag 50-79
Triangle 38-50
Running Triangle 10-40
Flat 38-79
Combination 38-50
Trading Scenarios
Channeling
Wave C often ends upon reaching
the extreme of the channel.
6.09
Elliott Wave International
770-536-0309 or 800-336-1618
www.elliottwave.com

How To Trade When The Market ZIGZAGS: The E-Learning Series For Traders

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

How To Trade When The Market ZIGZAGS: The E-Learning Series For Traders

Uploaded by

Copyright:

Available Formats

How to Trade When the Market ZIGZAGS

The e-learning Series for Traders

You might also like