Flat Correction / Flat (3-3-5)
General reference values based on Elliott Wave Theory. Actual success rates vary significantly depending on market conditions, timeframe, and instrument.
A sideways corrective pattern in Elliott Wave Theory with an A-B-C three-wave structure. Wave A is a 3-wave structure (unlike a zigzag), Wave B is also a 3-wave structure retracing approximately 100% of Wave A, and Wave C is a 5-wave impulse approximately equal in length to Wave A. The internal structure is 3-3-5, and the correction stays within a sideways range. Compared to zigzags, flats produce shallower corrections, suggesting strong residual force in the trend direction.
After confirming Wave B has retraced approximately 100% of Wave A, enter short when reversal signals (bearish engulfing, RSI divergence, etc.) appear at the start of Wave C's decline. Confirm that Wave B has returned to approximately Wave A's starting level, which is a condition for a flat correction.
Wave C's target is approximately equal to Wave A. The area near Wave A's endpoint (bottom) is the first target. Apply Fibonacci ratios (100%, 138.2%) from Wave A's origin to set the second target.
Place a stop-loss slightly above Wave B's peak. In a regular flat, Wave B does not significantly exceed Wave A's origin, so slightly above Wave A's origin may also work.
Volume tends to decrease overall in a flat correction. Low volume in Waves A and B, with increasing volume in Wave C enhancing pattern reliability. A volume surge in Wave C's final stages signals correction completion.