Following with the Elliott Wave theory that we have seen in the previous article, in this article we will see how the 5 impulse waves (in favor of the trend) proposed by Elliot are corrected and reversed by 3 waves against the trend called ABC Correction Waves.
Observe the following image:
The price swings marked by colored lines and the letters a, b, c form a corrective movement of the bullish wave formed by swings 1, 2, 3, 4 and 5.
Because we have used a bull market in the previous example does not mean that this theory does not apply to bear markets. The same pattern 5-3 may appear like this: