The ABC Correction: The Countermove to the 5-Wave Trend
After a 5-wave trend completes, the market usually enters a 3-wave correction that moves in the opposite direction. This is known as the ABC corrective wave.
Unlike impulse waves (which are numbered), corrective waves are labeled with letters: A, B, and C.
Let’s take a look at an example of this classic 3-wave correction—🔥 it's a textbook ABC setup!
What About Bear Markets?
Although we’ve used bullish examples so far, Elliott Wave Theory works just as well in bear markets. The 5-3 wave structure simply flips upside down.
Here’s how an ABC correction looks in a downtrend:
🔁 Reverse ABC Corrective Wave Pattern
Types of Corrective Wave Patterns
Elliott identified 21 variations of ABC corrections—some are basic, others are pretty complex.
“Wait… 21?! That’s way too much to remember!”
Don’t worry, padawan. You don’t need to memorize all 21. No Jedi mind tricks required.
In fact, almost all of these corrective patterns are built from just three simple structures.
Let’s explore them one by one. (These examples show corrections in an uptrend, but they can easily be flipped for downtrends.)
1. Zig-Zag Pattern
📉 Zig-zags are sharp, steep corrections that move against the main trend.
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Wave B is usually the shortest compared to Waves A and C.
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Sometimes, you’ll see multiple zig-zags linked together (like a double or triple zig-zag).
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Just like impulse waves, each wave in the zig-zag can be broken down further into smaller 5-wave structures.
2. Flat Pattern
➡️ Flat patterns are sideways corrections, where price moves more horizontally.
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The waves tend to be roughly equal in length.
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Wave B typically retraces most of Wave A.
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Wave C then undoes Wave B’s move.
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Occasionally, Wave B may overshoot the starting point of Wave A—but that’s still considered part of a flat.
3. Triangle Pattern
🔺 Triangles are consolidations where price coils within converging or diverging trend lines.
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Made up of five waves, triangles move sideways and oppose the main trend.
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There are several variations:
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Symmetrical
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Ascending
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Descending
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Expanding
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Triangles usually appear in Wave 4 of an impulse or Wave B of a correction.
Elliott Wave Theory might sound complex at first, but when you break it down into simple building blocks, it becomes much more manageable—just like learning to ride a bike, but with fewer scraped knees and more pips. 🚲📈