The 5-wave trends are then corrected and reversed by 3-wave countertrends.

Letters are used instead of numbers to track the correction.

Check out this example of a smokin’ hot corrective 3-wave pattern!

ABC Corrective Wave Pattern

Just because we’ve been using a bull market as my primary example doesn’t mean the Elliott Wave Theory doesn’t work on bear markets.

The same 5-3 wave pattern can look like this:


Reverse ABC Corrective Wave Pattern

Types of Corrective Wave Patterns

According to Elliott, there are 21 corrective ABC patterns ranging from simple to complex.

“Uh, 21? I can’t memorize all of that! The basics of the Elliott Wave Theory are already mind-blowing!”

The great thing about Elliott Wave is you don’t have to be above the legal drinking age to trade it!

You don’t have to get a fake ID or memorize all 21 types of corrective ABC patterns because they are just made up of three very simple easy-to-understand formations.Let’s take a look at these three formations. The examples below apply to uptrends, but you can just invert them if you’re dealing with a downtrend.