Zigzag Correction / Zigzag (A-B-C)
General reference values based on Elliott Wave Theory. Actual success rates vary significantly depending on market conditions, timeframe, and instrument.
The most common corrective pattern in Elliott Wave Theory, featuring a sharp A-B-C three-wave decline. Wave A is a 5-wave impulse, Wave B is a 3-wave structure retracing 38.2-78.6% of Wave A, and Wave C is again a 5-wave impulse approximately equal in length to Wave A. The internal structure is 5-3-5, characterized by a steep-angle correction. Since a strong retracement in the trend direction is not expected, Wave B's shallow retracement distinguishes it from other corrective patterns.
After confirming Wave B's peak, enter short when reversal signals (bearish engulfing, MACD death cross, etc.) appear at the start of Wave C's decline. Confirm that Wave B's retracement is within the 38.2-78.6% range of Wave A.
Wave C's target is equal to Wave A (100%) as the basic target. Apply Fibonacci ratios (61.8%, 100%, 161.8%) of Wave A's length from Wave B's peak to set targets. C = A at equal length is the most common destination.
Place a stop-loss slightly above Wave B's peak, or at a level beyond Wave A's origin (correction start). If Wave B exceeds Wave A's origin, the zigzag pattern is invalid.
Volume typically increases in Wave A and decreases in Wave B. If volume increases again in Wave C, pattern reliability is enhanced. Large volume in Wave B suggests considering a flat correction.