What it means
A correction is the move against the trend after an impulse. The two simplest forms are the zigzag and the flat, both labelled A–B–C.
In a zigzag, wave B retraces only part of wave A and wave C goes well beyond the end of A: a sharp correction. In a flat, wave B returns close to the start of A and wave C ends near the end of A: a sideways correction.
Why traders use it
Knowing which correction is forming helps judge where it may end. Sharp zigzags often correct a large share of the impulse; flats correct less in price but take longer.
Elliott practitioners also describe triangles and combinations; this lesson covers the two most common shapes.
Chart examples
Zigzag: sharp A–B–C
Flat: sideways A–B–C
How to identify it objectively
- 1Confirm a completed impulse first.
- 2Wave A: the first leg against the trend.
- 3Wave B: measure its retracement of wave A. Shallow (about 38–62%) suggests a zigzag; near 100% suggests a flat.
- 4Wave C: in a zigzag it extends beyond A; in a flat it ends near A.
Bullish use
- 1In an uptrend, a completed A–B–C correction is the area traders watch for the trend to resume.
- 2A close back above the wave B high after wave C suggests the correction has finished.
Bearish use
- 1In a downtrend, an A–B–C rally against the trend is watched for a failure.
- 2A close below the wave B low after wave C suggests the downtrend is resuming.
What confirms it
- Wave C completes with a reversal close.
- The correction ends near a level (prior wave 4, Fibonacci retracement, structure).
What invalidates it
- Wave C keeps extending far beyond the expected area: the "correction" may be a new trend.
- The structure turns into a five-wave move against the trend.
How a hypothetical setup is built
Entry
After wave C, on a close back through the end of wave B in the trend direction.
Stop
Beyond the end of wave C.
Target
The end of the prior impulse, then beyond.
A hypothetical illustration of how the concept is turned into a plan, not a recommendation. Practise it on a paper account first.
Related concepts
- Elliott Wave TheoryElliott Wave Impulse (1–5)
- Elliott Wave TheoryElliott Wave Fibonacci Ratios
- FibonacciAB=CD Pattern
Historical testing
Not tested on The Tradeskill.
Limitations: when it fails
- Corrections are the most complex and least predictable part of Elliott Wave.
- Flats, zigzags and combinations can look alike while forming.
- Labels often change as more price arrives.
Knowledge check
Pick an answer to see the explanation. Nothing is saved.