When it comes to Elliot Wave Theory, we know of two different correction patterns.
On the left you can see the classic correction, which is less common in real market situations. On the other hand, the flat correction (right) occurs more frequently in the market, since modern price action is often characterized by fakeouts. In this case, a fakeout looks like a wave B making a new high above wave A. In most cases, traders would open a trade here due to a structural break, which then runs against them (bull or bear trap).
In the following table you can see how the respective correction patterns differ from each other and what you need to pay attention to.
It is very important that you learn how to use Fibonacci tools correctly so that you can calculate the wavelength properly. Maybe I'll do a separate educational post on the proper use of those tools in future.
Thank you very much for your attention,
Your RT
On the left you can see the classic correction, which is less common in real market situations. On the other hand, the flat correction (right) occurs more frequently in the market, since modern price action is often characterized by fakeouts. In this case, a fakeout looks like a wave B making a new high above wave A. In most cases, traders would open a trade here due to a structural break, which then runs against them (bull or bear trap).
In the following table you can see how the respective correction patterns differ from each other and what you need to pay attention to.
It is very important that you learn how to use Fibonacci tools correctly so that you can calculate the wavelength properly. Maybe I'll do a separate educational post on the proper use of those tools in future.
Thank you very much for your attention,
Your RT
Comment:
Here you can see the current BTC price action, which is characterized by a Wave B (made out of 3 Waves) that makes a new high above the starting point of Wave A. Also, Wave C has the length of 61.8-100% of Wave A, which fits our requirement of a Elliot Wave Running Flat.
