Here's a little history of the ABC correction, while being regular, you should also consider complex corrections, The most common and predictable is the 5 wave ABCDE complex. The objective for trading any corrective pattern is to enter at or near the end of a corrective pattern in order put you in a position in the direction of the main trend. The safest time to enter is on the first reaction against the new trend. Identify the end of the first correction against the new trend to go short or long in the direction of the main trend. The basic character of a simple ABC correction, in general usually completes in the 50-62% retracement zone of the previous trend. Usually right at one of these two retracements
Wave C or the third wave of an ABC correction, often completes at or near the 100% alternate price projection of the Wave A. Wave C is very often equal in price to Wave A. Using the combination of the either the 50 or 62% retracements and the 100% retracement, high probability price targets for the end of ABC corrections can be identified in advance. It is amazing how these corrections complete at or near these price targets. The main difference between ABC and ABCDE, corrections are the number of waves. hehe!
ABCDE corrections have 5, instead of 3 waves, but the waves must > overlap < The range of a wave within the correction, trades into the range of the previous wave. Like ABCs, the ABCDE corrections often end at or near the 50-62% zone of the previous trend. Predicting Wave E of an ABCDE correction is very close to predicting wave C of an ABC correction
Wave C is usually around 100% the price of Wave A and Wave E is usually around 100% in price of Wave A and/or Wave C. The typical Wave E target usually includes either the 50% or 62% retracement of the previous trend and both the 100% alternate of Wave A and Wave C projected from the Wave D high or low. If not an ABC, then is it very likely an ABCDE
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