ABC wave theory
Definition of ABC wave theory
ABC wave theory is also known as the Elliot wave theory. In Elliot's wave theory, the two types of price movements are called trend or impulse and consolidation or corrective waves.
Traders usually make decisions based on the impulse wave to catch the broader trend in the market. For the best prices trade during the corrective waves which indicate temporary counter-trends. Look for trade entry signals once the price has corrected the average amount. The signal is strong if combined with a 5 wave impulse pattern or three-wave correction pattern in the end.
