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How to count waves and the Elliott waves

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Elliott Zigzag Trading

Elliott Zigzag Trading

The Zigzag pattern is a powerful Elliott wave pattern because its distinctive internal waves (5, 3, 5) allow technical traders to forecast the next price-action. One is more likely to see the zigzag pattern during the second wave and corrective phase of an Elliott wave cycle.

It is also easy to identify the zigzag pattern once one recognizes its first component (A-part of the zigzag pattern).  Note that the zigzag pattern is ABC pattern or three-component pattern like the flat correction.

Contrary to the flat corrections (especially the classic and running flat corrective waves) that are shallow, the zigzag pattern is a deep retracement corrective wave. 
One does not often come across the zigzag pattern during a shallow corrective phase like the fourth Elliott wave.

Practical Use Of The Zigzag Pattern

Day, Swing and position traders use the zigzag pattern to identify high probability reversal trade set-up.  For example, if a financial instrument rises under a high trading volume, but pulls back under a low trading volume at the time when the zigzag pattern is completed, one will apply a top-down trading method to buy the asset. The opposite is also true in a down trend when one wants to sell.

Technical traders also trade the C-part of the zigzag pattern. Though, in this case, it is a contra-trend, technical traders still love that trade because it is easy and less risky.  Remember that in each case one must apply a different times frame trading method.

Combining Zigzag Pattern And Fibonacci

Professional Fibonacci traders love to combine Fibonacci retracements with the zigzag pattern. Indeed the pattern makes Fibonacci retracements trading more reliable, and ultimately help traders to avoid Fibonacci gambling.

Avoid Overbought And Oversold Trading Mistakes
With The Zigzag Pattern

One can avoid misusing momentum oscillators such as the stochastic, CCI and RSI by combining both the oversold and overbought oscillators with the zigzag pattern.

Other Practical Use Of The Zigzag Pattern

1/ Combining the zigzag pattern with the Andrews pitchfork tool.
2/ Combining the zigzag pattern and double top and bottom chart patterns.
3/ Using the zigzag pattern to forecast the next price-action.

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