Background
The illustration on the right is an example of a typical Zig-Zag Wave Pattern that occurs during a bear market.
The Zig-Zag Wave Pattern is a corrective wave pattern, since it is going against the larger trend, which was a bearish or downwards trend before the start of the upwards correction.
During a bear market, a corrective Zig-Zag Wave Pattern will appear to reverse the downtrend that was in place preceding the Zig-Zag Wave Pattern.
Characteristics
- A Zig-Zag Wave Pattern sub-divides into a 5-3-5 wave combination
- A Zig-Zag Wave Pattern usually appears after a completed Motive Wave Pattern, going on to form a complete 8 wave cycle. However, a Zig-Zag Wave Pattern can also appear in other corrective wave patterns, such as a Wave 2 or a Wave 4
- The ends of Wave A and C can usually be identified by the large increase in trading volume on the final day of the wave
- Wave B does not exceed the beginning of Wave A, therefore Wave B provides an opportunity to cover short sold shares before the completion of Wave C of the Zig-Zag Wave Pattern
