# Elliott Wave Zigzag & Fibonacci Patterns

### Elliot Waves & Fibonacci

Fibonacci numbers are a mathematical sequence that is defined by adding the first two numbers to get the next number. This sequence usually starts with a 0-1 or a 1-1 pattern. Extending from there the pattern looks like this: 0-1-1-2-3-5-8 and so on. The Elliot Waves are a sequence of waves with a 5-3 pattern; five waves that are impulse waves and three waves that are corrective waves. Within each wave of an Elliot wave set is another wave set; wave 1 is made up of 5 waves. This is a degree. It is crucial for any trader to understand the relationship between Fibonacci and Elliot. It becomes part of the technical analysis. A trader can have their strategies for trading, but it is useless unless paired with a technical analysis.

Not only are there waves and degrees, there are also retracement, expansion and time levels. Understanding the application of these levels will aid in your analysis and give you a competitive advantage. Let’s look at the definition of these new terms.

** Retracement** is when the number moves up or down depending on a bullish or bearish market; but then it quickly recovers and continues to follow the trend.

A ** reversal**, on the other hand, is when the number moves up or down but does not recover. It continues on a resistance move up or down against the trend.

An ** expansion** is realized when the C wave extends beyond where the A wave started. It always starts as a corrective wave and is in a 3-3-5 pattern (note the Fibonacci numbers). So, in Wave A there are 3 sub-waves followed by Wave B which also has three sub-waves and concluded with Wave C which has 5 sub-waves. For example, the wave A could start at 20; then Wave B comes along with 3 sub-waves that end at 25; followed by Wave C, with its 5 sub-waves that end at 15, which is below where Wave A started.

The ** time factor** really falls into Binary Options, where you predict what the market will do in a certain period of time. This type of prediction all on its own is difficult. But by using Elliot Wave Theory and Fibonacci Numbers you can come close.

### Elliot Wave Zigzag Pattern

One of the corrective wave patterns is the ** zigzag**. The corrective wave pattern is constructed of three waves (A-B-C). A zigzag follows a 5-3-5 pattern. This means Wave A is comprised of 5 sub-waves, followed by Wave B which has 3 sub-waves and concluded with Wave C that has 5 sub-waves. This pattern forms a zigzag. There can be

**as well. This is when an X Wave is introduced between the zigzag wave tying them together into either the double or triple depending on if there is one or two X Waves. It should be noted that triple zigzags are rare.**

*double and triple zigzags*### Zigzag Compared with Flat & Triangle

The wave pattern of a zigzag has much longer legs on the A wave and C waves than a flat. Again, both are corrective waves. Since there are also combinations of waves you need to pay close attention to the C wave. If the C wave is longer than the A wave, most likely the whole zigzag is part of another type of wave pattern called the triangle.

A flat is where the peaks and valleys don’t surpass one another. So, the B Wave moves up to the previous high, followed by the C Wave falling down to the previous low. If you were to trace a line along all the highs and all the lows, you would have two parallel lines. This is the description of a flat.

A triangle is a 3-3-3-3-3 pattern. So, each part of the impulse wave has three sub-waves. The key thing to know about triangles is that they can only happen at specific times in the cycle. This means they can be a good indicator of where things are in the cycle. A triangle can only form as part of the leg prior to the final wave, meaning Wave 4 in the impulse trend or Wave B in the correcting trend. They can also form in an X wave and during the last wave of a total movement. If you were to draw a line across all the highs and all the lows you would get one of two patterns: an expanding or contracting triangle. Expanding triangles have higher highs and lower lows making the two lines open up on the right and a contracting triangle would have lower highs and high lows make the two lines converge on the right.

Because the position of a triangle is always known, the trader who is familiar with the Elliot Waves and Fibonacci Numbers has a particular advantage

### Corrections can be Complex or Simple

A zigzag can be a complex correction grouped with other patterns or it can be a standalone correction. A complex correction is where the X wave is introduced and you get a double or triple zigzag; possibly a triangle or a flat. A complex correction can only go so far based on the Fibonacci Numbers. A simple correction is the basic Elliot wave with a 5-3 structure; 5 impulse waves followed by 3 corrective waves. This is the true zigzag pattern and the only simple correction.

### Conclusion

It is good tactics to be well-versed in the Elliot Wave Theory and the Fibonacci Numbers. The patterns repeat themselves over time. If you can analyze the data from one given point in time you will eventually begin to see the whole cycle unfold. This will help you determine what the numbers will do. Couple this with your overall trading strategy and you should have a sound plan to follow. It sounds simple, but in reality it is more complicated than what can be presented here. Learning the Elliot wave patterns and terminology is a great step to putting together your complete plan.

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### John Miller

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