# Zig Zag Elliott Wave

In the world of technical analysis, the Zig Zag Elliott Wave pattern is a price pattern that is used to identify trends and potential trading opportunities. The pattern consists of three waves, labeled A-B-C, and can be found in various locations within the eight wave Elliott Wave sequence. Traders who are familiar with the Zig Zag Elliott Wave pattern can use it to identify potential buying and selling opportunities and to help them make more informed trading decisions. In this article, we will explore the intricacies of the Zig Zag Elliott Wave pattern and provide insights on how traders can apply it to their trading strategies.

## What is the Zig Zag Elliott Wave?

The Zig Zag Elliott Wave is a price pattern used in Elliott Wave theory. It is a pattern that traders should be aware of when analyzing price movements in the financial markets. While it’s a counter-trend formation, it can appear at different locations within the eight-wave Elliott Wave sequence, and traders can use it to make trading decisions.

As with other Elliott Wave patterns, Zigzags consist of three waves labeled A-B-C and can occur in either the bullish or bearish direction. Additionally, they can lead to bullish, bearish, or sideways movement depending on the circumstances. In a Zigzag, wave A is always an impulse or a leading diagonal, while wave B could take the form of any correction pattern. Wave C is always an impulse or an ending diagonal. The length of waves A, B, and C is also crucial in determining the significance of the Zigzag pattern.

## Zig Zag Elliott Wave Strategy

Traders can use the Zig Zag Elliott Wave pattern in trading by following a few simple steps. The first step is to identify the pattern on a price chart. Look for a three-wave structure consisting of an A-B-C formation that zigzags between two parallel lines. Once identified, traders can use Fibonacci retracements to determine potential entry and exit points.

Traders should look for Wave B to retrace between 50% and 78.6% of Wave A, and for Wave C to extend beyond the end of Wave A. Stop-loss orders should be placed below the low of Wave A. The target price can be set at the 100% Fibonacci extension level of Wave A, or traders can use other technical indicators or support and resistance levels to determine exit points. It’s important to note that Zig Zag patterns can occur in both bullish and bearish markets, so traders should analyze the larger trend before making a decision.

• Look for the end of wave C in a bullish zigzag as a potential buy signal.
• If a bullish zigzag pattern appears in a larger uptrend, consider buying at the end of wave C for a continuation of the trend.
• Traders may consider opening a long position when any or both of the above requirements are met

### Sell Signal

• Look for the end of wave C in a bearish zigzag as a potential sell signal.
• If a bearish zigzag pattern appears in a larger downtrend, consider selling at the end of wave C for a continuation of the trend.
• Traders may consider opening a short position when any or both of the above requirements are met

## Zig Zag Elliott Wave Pros & Cons

### Pros

• It provides a clear and simple corrective wave pattern that can be easily identified on price charts.
• It can be used to identify potential entry and exit points for trading positions.