WXY AND ABC CORRECTION WAVES
If you are wondering what is the difference in terms of labelling of correction waves, why sometimes we use ABC and other times we use WXY. You are in luck today because I’m going to explain just that, I’m going to use a diagram and also use a real chart to show you difference in both labelling.
Looking at the diagram above we can easily explain the difference. The left pattern is a zig-zag ABC pattern, you can see it by having 5 sub waves on wave A and 3 on wave B and also 5 on wave C also known as (5-3-5). The right pattern is complex pattern called double three patterns you spot it because of wave A consist of 3 waves, then B consist of 3 and also C has 3 (3-3-3). Below are Noticeable differences between ABC and WXY.
- Wave A on the ABC consists of 5 sub waves, while on the WXY it consists of 3 waves
- Wave C consists of 5 sub waves in ABC and 3 sub waves for WXY.
We have seen the differences now let look at their similarities
- They are both 3 waves whether it ABC OR WXY, it still 3 waves in the opposite of motive waves.
- Wave B is the same for both correction waves, it consists of 3 sub waves.
- Another common thing is that they differ in counting only in terms of their relationship with Fibonacci ratios they obey the same levels.
- Wave A is usually more or less same as long as wave C.
Below let look at the real-time chart of EUR/USD on a monthly time frame.
Looking at the diagram above we easily see that wave A consist of 3 sub waves so that means we are in a WXY. And guess what both the other waves, wave B and C also followed 3 sub waves. I know a lot of new traders will always label every correction as ABC, which is not correct. ABC is very rare to see in the market. The important thing with these two corrective wave type whether it ABC or WXY is that they both end between 100% – 261.8% Fibonacci extension of wave A. Please note that we could have more than WXY to WXYZ when we have a really complex correction pattern like triple threes.
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