Flats
A flat is a correction that differs from a zigzag in that its sequence is a 3-3-5 wave. The reason is that the first wave A lacks the strength to create five sub-waves. Then, B-wave finishes near the starting of A and then C, having five sub-waves that, generally, ends slightly below A, almost drawing a double bottom or top.
The final wave of a flat wave is a 5-wave pattern. Therefore, we can use the setup used for the 5th wave (Fig. 8). So, that means trading the breakout of the [iv] wave. Fig 14 shows the configuration for bull and bear markets.
Triangles
A triangle is a price pattern reflecting doubts and a balance of opinions between market participants. This pattern subdivides into 3-3-3-3-3 sub waves, labeled A, B, C, D, and E. A triangle is outlined when connecting A and C, and B and D. It’s usual for Wave E to undershoot or overshoot the A-C line.
There are three triangle varieties: Contracting, barrier and expanding., and shown in Fig 15.
The safest entry waits for the price to break [c] wave. More aggressive entries are not recommended because triangles are very deceptive, and sometimes, some formation that seems a bullish continuation pattern actually could be a bearish triangle.
This completes this basic guide to Elliott Wave trading.
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