PN Te M al Lez Home Study Program nny Session-5 5.1 CORRECTIVE WAVES Coorectve waves as the name implies, correct or retrace the movement unfolded by the motive waves. These waves, give the respite to the fast moving market. We can see all retracements, all pauses and where markets move sideways unfolding as corrective patterns. Numerous variations exist within the corrective patterns, but we can broadly divide them into three classes + Sharp patterns + Sideways patterns + Triangles In sharp patterns, named Zig Zags and Double Zig Zags, we see a swift retracement cf the markets. Sharp patterns normally tend to effect a deeper retracement of the earlier Impulse. In Sideways corrections, named Flats and Double Threes, markets unfold a shallow retracement over a prolonged period appearing to generally waste a period of time within a narrow price range.The Triangles, are also a sideways correction, but Triangles are made up of 5 waves. They are the only corrective pattern that unfold in 5 waves. A fourth kind of corrective patterns also exits. It is a combination of the above patterns. We shall look at the combining corrections in detailed analysis of the each pattern. All corrective waves unfold as three waves. Triangles while unfolding in five waves are also included in correctives for specific reasons as we shall see later. For ease of nomenclature, all corrective patterns including the triangle are also called Threes. Let us now look at the different corrective patterns...5.2 ZIG ZAG Zig Zags are the most common patterns seen in the markets. Zig Zags are the basic building blocks of the market, a point we shall explore in great detail later on. The Zig Zag in its simple form is 2 three wave structure and ; is labeled a-b-c. Both the a and c waves in the Zig Zag subdivide into five wave motive wave structures. The B wave takes on the form of a corrective wave, and it is parungziczac normally a Zig Zag in itslef. c 5 INVERTED ZIG ZAG 3 Zig Zags move down in a rising market (Bull Market) and they unfold upwards in a falling market. (Bear Market). Zig Zags in a bear market are also called inverted Zig Zags. Zig Zags represent the first variety of Corrections, namely the Sharp Correction. While unfolding in a Zig Zag, markets tend to retrace a large portion of the earlier motive wave.5.3 DOUBLE ZIG ZAG Quite often, the retracement effected by the Zig Zag is insufficient to reflect the full normal retracement required by the market. In such cases, the first Zig Zag adds or strings another Zig Zag to itself. However to add one more Zig Zag to itself, there needs to be an intervening wave otherwise the pattern would not effect the necessary retracement. Thus we see two Zig Zags in the same direction with another corrective pattern in between. This intervening corrective pattern itself is normally another Zig Zag. INVERTED DOUBLE ZIG ZG The Double Zig Zag can also unfold upwards and in that case it is inverted. The Double Zig Zag brings out a much deeper and sharper correction in the market. Double Zig Zags are labelled W-X-Y. There are a few rules concerningdetailed analysis of these patterns individually and we shall be able to appreciate then once we have knowledge of all the various patterns. For now it will suffice to know that a Double Zig Zag is two Zig Zags strung together by an intervening three wave pattern Let us now lock at the Sideways patterns...