0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Bullish
Wall Street
Bullish
Gold
Mixed
GBP/USD
Bullish
USD/JPY
Mixed
More View more
Real Time News
  • @JohnKicklighter Who knows... perhaps their next venture will include printing fake meat for $BYND 😅
  • AUD/USD and NZD/USD drift into the crosshairs as an RBA decision and NZ jobs data loom.Get your market update from @RichDvorakFX here:https://t.co/1Z8ZqQK6ih https://t.co/Hc8cfQNtys
  • #NASDAQ100 hit an all time high over the past 24 hours, but key resistance held in futures $AUDUSD fell as local virus cases grew, awaiting the #RBA next What else is in store for APAC markets today? https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2020/08/03/Nasdaq-100-Record-High-Faces-Resistance-AUDUSD-Turns-to-RBA-Next.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/ImuoXUAeBa
  • Kodak shares surged over 2,100% in the first half of last week. At present, it is down 75% from its new record high. Cryptomining and Covid vaccine production support. Look, forward to the next turn. Maybe a camera-related venture... https://t.co/7neSCnwzW8
  • 🇰🇷 Inflation Rate YoY (JUL) Actual: 0.3% Expected: 0.35% Previous: 0% https://www.dailyfx.com/economic-calendar#2020-08-03
  • 🇰🇷 Inflation Rate YoY (JUL) Actual: 0.3% Expected: 0.35% Previous: 0.0% https://www.dailyfx.com/economic-calendar#2020-08-03
  • Heads Up:🇰🇷 Inflation Rate YoY (JUL) due at 23:00 GMT (15min) Expected: 0.35% Previous: 0.0% https://www.dailyfx.com/economic-calendar#2020-08-03
  • The Japanese Yen saw large inflows with bullish positioning rising some $1.1bln to $3.4bln as the precipitous decline in US yields dragged USD/JPY lower.Get your market update from @JMcQueenFX here: https://t.co/SJN9QC3kEF https://t.co/xcXG9Qk3Da
  • President Donald Trump: There will be competition to Amazon - BBG $SPX
  • President Donald Trump states he will discuss suspending payroll tax collection - BBG $USD
Elliott Wave Patterns: What is a Zigzag?

Elliott Wave Patterns: What is a Zigzag?

2018-03-30 16:11:00
Jeremy Wagner, CEWA-M, Head of Education
Share:

Talking Points

-Zigzags appear in the construction of many of the Elliott Wave patterns

-Zigzags subdivide as an A-B-C (5-3-5) sequence

-Many times, wave C can be estimated using common ratios and channeling

In Elliott Wave theory, a zigzag is a pattern consisting of 3 waves labeled A-B-C. Most of the time, the pattern will print in the direction against the main trend and is typically a counter trend formation. Zigzags are typically found in the 2nd wave of a 5 wave impulse and have a part in the formation of Elliott wave triangles. Many times, zigzags appear somewhere within a complex correction. There are even a few instances where a zigzag will print in the direction of the larger trend. As a result, the zigzag pattern is an integral price pattern which can be found in several locations within the eight wave Elliott Wave sequence.

Zigzags can print in either the bullish or bearish direction.

Idealized Zigzag

Elliott Wave Patterns: What is a Zigzag?

[Image 1]

Zigzags look like a lightning bolt on the chart. There are 2 rules for zigzags:

  1. The sub waves of an A-B-C zigzag appear as 5-3-5
  2. Wave B of the zigzag cannot retrace 100% of Wave A – most of the time wave B retraces 38-78% of wave A
Elliott Wave Patterns: What is a Zigzag?

[Image 2]

The 3 waves of the zigzag (A-B-C) subdivide as a 5-3-5 meaning the ‘A’ leg has 5 sub waves in it, the ‘B’ leg has 3 sub waves in it, and the ‘C’ leg has 5 sub waves in it. As a result of the ‘A’ and ‘C’ legs both containing 5 sub waves each, the impact of the whole zigzag structure is to be a deep retracement and recover a lot of price from the previous trend.

Also, the zigzag was designed to make progress against the trend. Therefore, wave B of a zigzag can be any 3 wave pattern (including another zigzag), but wave B cannot retrace 100% of wave A. A retracement of 99% is acceptable, though unlikely and progress needs to be made.

There are a couple of reasons why the 2nd wave of a 5 wave impulse is typically made up of a zigzag. The first reason is because the 1st wave is the start of a new trend, the 2nd wave can be latent desires for the old trend to continue. As a result, the 2nd wave acts as a shake out for the new trend traders and the old trend traders as a deep retracement is typically obtained. Second waves typically retrace 50-78.6% of the first wave.

Within the zigzag pattern, many times you can estimate the termination zone of wave C. In Elliott Wave Theory, alternating waves tend to be related in distance. Therefore, once we believe wave C has started, we can estimate the length of C based on the length of A. Wave C typically has an equal measurement to wave A, or a .618 or 1.618 multiple of wave A.

In the example below, we can see where wave ‘C’ was equal in length to wave ‘A’ at the black horizontal line labeled “100% 7488.2.”

Elliott Wave Zigzag That is an Equal Wave

Equal Wave Zigzag [Image 3]

Created using IG charts

Additionally, it is common for the A-B-C zigzag to create a price channel. So we can use the price channel as a means to estimate the termination point of C and the zigzag pattern.

These price approximations become powerful when there are other wave relationships showing up in the same price zone as the estimated termination point.

Interested in learning more about zigzags, how to identify and trade them? Register and watch this hour long webinar recording solely on the topic of zigzags.

---Written by Jeremy Wagner, CEWA-M

DailyFX Education

Having a method to time trade entries is important. Managing your risk may be even more important. Learn how the better performing traders manage their risk by reading our Traits of Successful Traders research. [Free registration required.]

Follow me on twitter at @JWagnerFXTrader .

Read More: 3 Elliott Wave Flat Patterns to Know and Understand

The full suite of Elliott Wave resources can be found at the links below [registration required]:

Beginner and Advanced Elliott Wave trading guides

For more in depth study on Elliott wave patterns, we have these one hour webinar recordings:

Elliott Wave Impulse Patterns

Elliott Wave Zigzag Patterns

Elliott Wave Flat Patterns

Elliott Wave Triangle Patterns

Elliott Wave Diagonal Patterns

Starting Your Elliott Wave Counting

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.