Hello fellow traders, in this technical blog we’re going to explain what Elliott Wave Zig Zag pattern looks like on real market example CADJPY price structure. Before we take a look at the $CADJPY chart, lets get through some basic EW theory and explain Zig Zag in a few words.
Zig zag is the most popular corrective pattern in Elliott Wave theory . It’s made of 3 swings which have 5-3-5 inner structure. Inner swings are labeled as A,B,C where A =5 waves, B=3 waves and C=5 waves. That means A and C can be either impulsive waves or diagonals (Leading Diagonal in case of wave A or Ending in case of wave C) . Waves A and C must meet all conditions of being 5 wave structure, such as: having RSI divergency between wave subdivisions, ideal Fibonacci extensions, ideal retracements and so on…
At the graphic below, we can see what Elliott Wave Zig Zag structure looks like. 5 waves down in A, 3 wave bounce in B and another 5 waves down in C.
$CADJPY H1 Asia update 10/28 2016 The pair is doing wave (x) blue recovery, correction against the 79.67 peak , which is unfolding as Elliott Wave Zig-Zag pattern. It’s showing clear 5 waves in the first leg a red, and due to a fact c red has only 3 waves so far, we’re calling for another short term swing up toward c=a area at 78.88-79.13 to complete c red as 5 waves and whole (x) blue correction as zigzag. Once (x) correction completes, we expect further decline in wave (y) blue toward new lows below 10/21 low.
$CADJPY H1 Asia Update 11/02 The pair made short term push up in wave v of c red, reached proposed technical zone at 78.88-79.13 and completed blue (x) recovery at 78.968 peak as 5-3-5 structure. We got the nice decline , new lows have been made and now the pair is targeting 76.87-76.40 area.
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