Can You Count to 7? Then You Can Navigate Complex Corrections
by Vadim Pokhlebkin
Updated: May 18, 2020
Anything can look complicated at first. (Remember learning to tie your shoes?) Elliott wave analysis is no different.
The numbers, the letters... if you're new to Elliott, it can all seem quite intimidating.
But it doesn't have to be. You just need a good instructor -- like our own Jeffrey Kennedy -- to show you the ropes.
Of course, some parts of Elliott wave analysis can intimidate even experienced wave traders -- for example, complex corrections.
But watch our Trader's Classroom instructor show you a simple trick to navigate the markets when prices get "messy."
Warning: This trick involves... having to count to 7.
Free, watch now
If there's one wave pattern that causes the most confusion, that would be the complex correction, what we refer to as a W, X, Y. Well, in today's short video, I'm going to show you a trick that will easily allow you to navigate the sometimes confusing wave pattern a little bit more easily.
Now the diagram in front of us is that of a complex correction which we labeled W, X, Y.
Now even the term complex correction can be a little bit intimidating because it also encompasses double zigzags, double threes and combinations. But in its simplest terms, all a complex correction is, it's two corrective wave structures joined together by an X wave. Now my simple trick that I would like to offer you to navigate the structure more easily is simply count to seven.
Okay, look at this diagram. It's the same diagram, but I've actually identified the actual subwaves and we have waves 1, 2, 3, 4, 5, 6 and 7. A, B, C, X, A, B, C. So this is actually our complex correction or specifically our double zigzag that we were initially looking at.
Now let's look at a price chart just simply to drive this point home.
This is a price chart of Aspen Technology, ticker symbol as AZPN. Count the number of sub waves up from the March low. 1, 2, 3, 4, 5, 6, 7. A, B, C, X, A, B, C.
So with that in mind, I think we can confidently identify the larger Elliott wave structure or the larger decline in Aspen Technology to the downside as an unfolding impulse wave.
And specifically I'm looking at this complex correction, this seven wave move as a fourth wave within the larger five wave decline. This would actually argue for further selling back to below the March low. And in Trader's Classroom I'll be keeping an eye on this moving forward. Well, there you go. If you can count to seven, you can navigate the sub waves of a complex correction much more easily because seven is the precise number of sub waves that are contained within a W, X, Y.
Keep these "lessons in simplicity" coming
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