CMT Elliott Wave Theory 2 — Questions and Answers
Question 1: What are the three basic categories of simple corrective patterns in Elliott Wave Theory?
- Flags, pennants, and wedges
- Zigzags, flats, and triangles (Correct answer)
- Head and shoulders, double tops, and double bottoms
- Channels, broadening formations, and wedges
Correct answer: Zigzags, flats, and triangles
Elliott Wave corrective patterns fall into three basic categories — zigzags, flats, and triangles — which can combine into complex corrections.
Question 2: In a zigzag (5-3-5) corrective pattern, what is the internal sub-wave structure of Waves A, B, and C respectively?
- A=3, B=5, C=3
- A=5, B=3, C=5 (Correct answer)
- A=3, B=3, C=3
- A=5, B=5, C=5
Correct answer: A=5, B=3, C=5
A zigzag is a 5-3-5 structure where Wave A subdivides into 5 waves, Wave B into 3 waves, and Wave C into 5 waves.
Question 3: What primarily distinguishes a flat correction from a zigzag in Elliott Wave Theory?
- A flat has five waves while a zigzag has three
- Wave B in a flat retraces approximately 90–100% of Wave A, and Wave C ends near Wave A's terminus (Correct answer)
- A flat only occurs in Wave 2 while a zigzag only occurs in Wave 4
- A flat retraces more of the prior trend than a zigzag
Correct answer: Wave B in a flat retraces approximately 90–100% of Wave A, and Wave C ends near Wave A's terminus
In a flat, Wave B retraces approximately 90–100% of Wave A and Wave C ends near or at Wave A's end, creating a 'flat' sideways structure versus the sharper zigzag.
Question 4: How many sub-waves (labeled A through E) does a contracting Elliott Wave triangle contain?
- 3 sub-waves
- 4 sub-waves
- 5 sub-waves (Correct answer)
- 7 sub-waves
Correct answer: 5 sub-waves
An Elliott Wave contracting triangle contains 5 sub-waves labeled A–B–C–D–E, each of which is itself a three-wave corrective structure.
Question 5: What is the internal sub-wave character of each leg within an Elliott Wave triangle?
- Each leg is a 5-wave impulse
- Each leg is itself a triangle
- Each leg is a 3-wave corrective structure (Correct answer)
- Legs alternate between 5-wave and 3-wave
Correct answer: Each leg is a 3-wave corrective structure
Each of the five legs (A–E) in an Elliott Wave triangle is a three-wave corrective structure, making the full triangle a 3-3-3-3-3 pattern.
Question 6: What market behavior typically follows an Elliott Wave triangle pattern?
- Another triangle of larger degree
- A complex combination correction
- A thrust move in the direction of the larger trend (Correct answer)
- A sharp reversal against the prior trend
Correct answer: A thrust move in the direction of the larger trend
After completing a triangle, the market typically generates a 'thrust' in the direction of the larger trend, often approximating the width of the triangle's widest section.
Question 7: What is a 'double three' (W-X-Y) or 'triple three' (W-X-Y-X-Z) in Elliott Wave Theory?
- A wave with one corrective pattern repeated three times consecutively
- Complex corrections combining two or three simple corrective patterns connected by X waves (Correct answer)
- Three consecutive impulse waves forming a single trend
- A correction that retraces exactly three Fibonacci levels
Correct answer: Complex corrections combining two or three simple corrective patterns connected by X waves
A double three or triple three is a complex corrective structure that links two or three simple patterns (zigzags, flats, triangles) using connecting X waves.
CMT Elliott Wave Theory 2
What are the three basic categories of simple corrective patterns in Elliott Wave Theory?