Elliott Wave Patterns: What is a Zigzag?

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.”