Irregular correction is most frequently seen pattern of Elliott Wave Theory which witnessed even more than Simple Zigzag Correction.
But it is less understood by majority of Elliott Wave Theory analysts and practitioners, even very few EWT analysts knows about this word “Irregular”.
A Simple Zigzag correction comprises of three inner waves marked as (A), (B) and (C). Wave (A) is impulse, wave (B) is corrective and is shorter than (A) whereas next wave (C) is always an impulse generally equal or larger than (A).
When wave (B) breaks the start of (A) or wave (B) retraces more than 100% within a correction, we call it Irregular Correction Pattern.
See (Image 1), this is the simple display of an this corrective pattern. We call it Irregular because wave (B) is “Irregular” in this pattern
Wave (B) is only the corrective wave which can retrace more than 100% of its previous Impulsive wave (A). Other corrective waves (2) and (4) can never retrace more than 100% of its previous impulsive waves (1) and (3) respectively.
Irregular Correction can be of different sub pattern like 5-3-5, 3-3-5 and Double Irregular. Let me explain one by one.
When wave (A) of a correction is impulse (5 waves move), we call it 5-3-5 pattern. Wave (B) is always a corrective (3 waves move) and wave (C) is always an impulse (5 waves move) in every case but wave (A) can be either impulse or corrective within Irregular Correction.
So when (A) is impulse (5 waves), the pattern become 5-3-5. Look at (Image 1) for visual explanation.
When wave (A) is corrective (3 waves move, ‘abc’), then Irregular Correction forms 3-3-5 pattern.
Wave (A) is corrective (3 waves), wave (B) is corrective (3 waves) and wave (C) is impulse (5 waves), so the pattern become 3-3-5. Look at (Image 2) for visual explanation of 3-3-5 Pattern.
Sometime both wave (A) and (B) is Irregular in a correction.
Means inner wave ‘b’ of (A) is irregular followed by (B) is also irregular which form Double Irregular Correction. Look at (Image 3) for visual explanation.
Any correction becomes Irregular when its inner wave (B) breaks the start of previous wave (A).
So, the first and only mandatory requirement for Irregular Correction is that, “wave (B) must cross the start of wave (A)”.
Other optional rules are as follows: –
Wave (A) of Irregular Corrective pattern can have either Impulse (12345) or Corrective (abc) pattern.
Wave (B) retrace wave (A) by 100%-123% in most of the cases but there is no exact maximum Fibonacci retracement limit. It can move even as higher as 200% or more without any maximum limit.
Wave (B) can have any corrective pattern out of Simple Zigzag, 3-3-5 Flat or Irregular.
Internal wave (C) can have only Impulse Pattern. 61% is minimum projection limit for wave (C), 100%-123% is normal projection limit but there is no maximum limit, it can project more than 123% depending upon previous wave.
Inner Wave (C) of this corrective pattern often complete at or beyond the end of (A). But wave (C) in this correction can also complete before the end of (A), provided the Impulse pattern is completed and minimum 61% projection is achieved.
Wave (C) is of Irregular Correction pattern is often sharp and fast which scare traders just before reversal, and the next move after completion of this Correction is often quick and sharp.
See Image 4 for visual explanation.
Irregular Correction is the indication of strong main trend and Reversal after completion of this pattern is often sharp and strong.
It gives huge profit opportunity if identified at its completion because of its Elliott wave personality. Have a careful look at (Image 5)
This is daily chart of Nifty covering move from Oct 2018 to March 2019.
Nifty formed repeated Irregular Corrective Patterns within this period which confused us multiple times.
Wave [B or 2] completed at 10585 is perfect example Double Irregular Correction.
Have a look at speed and intensity of inner wave (c) of (iv) and then look at the intensity and speed of bounce after completion of wave (iv) as Irregular corrective pattern.
Now let me show you the move after completion of wave [B or 2] at 10585 on Image 6
This is again daily chart taken from my analysis report of 04 April 2019 (25 days after the move on Image 5).
Have a careful look at move after 10585 after completion of wave (B or 2) as Irregular Correction.
Reversal after completion of Irregular Correction is often fast and strong, that’s why this pattern gives huge profit opportunity if you develop the skills to identify it.
Inner wave (C) of an Irregular Correction is often sharp and destructive and it often shakes the confidence weak traders/investors before reversal.
But the reversal after completion of wave (C) of this correction is also sharp and sometimes doesn’t give chance to trade.
The analysts and traders who are familiar with the personality of this corrective pattern and its inner wave (C) try to cash opportunity when majority is scared
About Deepak Kumar
An independent Elliott Wave Theory analyst, trainer and trader. Analyzing Indian Indices and stocks since 2011. Founder of “Sweeglu Elliott Waves” and author of most practical book on Elliott Wave Theory, “Practical Application of Elliott Wave Principle”
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