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CORRECTIONS
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Corrections are normally classified as simple or complex. Simple refers to zigzag corrections, and complex refers to every­thing else. In a-b-c three-wave corrections, whether simple or Wave 1, 3, or 5 Completed 5

Figure 7-8 Impulse and corrective waves of various degrees.

complex, the b wave always contains three waves, and the c wave always contains five waves. The a wave may contain either three waves or five waves. If it contains five waves, that is your tipoff that it is going to be a zigzag type correction. If it contains three waves, it most likely will be a flat, irregular, or triangle correction.

Simple (Zigzag) Corrections

Once the five waves of wave a are finished, the b wave correction normally will not retrace more than 62 percent of the length of wave a (Figure 7-9). In rare instances, it may correct to 75 percent. Because wave c shares the characteristics of wave 3, it can be a profitable trading format. If wave b ends between 50 percent and 62 percent of wave a, look for a fractal and a

Wave a of a zigzag pattern is always five waves.

Therefore, if five waves can be identified in wave a, expect a tradable zigzag pattern to materialize.

squat to establish an entry for trading wave c. Then trade wave c just as you would any other five-wave sequence.

Use the five magic bullets to take profit at the end of wave c of wave 4, and reverse to trade wave 5 in the opposite direction.

Complex Corrections

There are three types of complex corrections: (1) flat correction (Figure 7-10), (2) irregular correction (Figure 7-11), and (3) triangle correction (Figures 7-12 and 7-13).

Flat

Wave a in other types of corrections is three waves,

Figure 7-11 Irregular correction.

In a flat correction, each wave is almost identical/equal. If wave b exceeds the high of the last impulse wave, you can suspect an irregular correction.

Triangle corrections are five-wave patterns labeled a-b-c-d-e. They usually occur in the next to the last wave sequence— wave 4 or wave b. When triangles occur in wave 4, prices tend to shoot out in the direction of the impulse wave 3 being cor­rected (Figure 7-12). When triangles occur in wave b, prices tend to shoot out in the direction of the correction wave a being corrected (Figure 7-13).

We have examined the characteristics and typical formations of both the impulse and the corrective waves. Next, we need to find easy and profitable techniques of entering trades to maximize the predictability given by accurate analysis of wave structure.

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