One of the more difficult and certainly confusing aspects of the Elliott Wave Theory involves the nebulous complex corrections and X Waves. A beginner with the wave theory will certainly spend a lot of time trying to understand X waves. To add to the complication they will undoubtedly follow other Elliotticians and not understand why what appeared to be a normal correction was labeled as a WXY or WXYXZ. We are going to try to take the mystery out of this issue for you.
When to declare an X wave and a complex correction
An A,B,C correction, whether a flat, zigzag, or triangle, needs to follow some proper guidelines. Those are expressed in the webpages on the specific corrections. When they don't follow the guidelines they are not properly labeled as a zigzag, flat, or triangle. They have become complex and must instead be labeled as such. Here is an ongoing list of when you should declare an X wave, and thus a complex correction:
When wave A consists of 3 waves, but wave B does not reach a 90% retracement of A. You can not properly identify the structure as a flat or a zigzag. Potentially it could work as a triangle, but without a really complex C wave or a D wave you can't really label it as a triangle either. It should tentatively be labeled as an X wave.
Following an A,B,C retracement, the price starts what is expected to be wave 3 (or wave 5), but pivots and reverses before reaching the pivot of wave 1 (or 3). Label it as an X wave. (Note it can't be an extension forming (another 1-2), as that would penetrate the pivot before reversing.
Signs that a complex correction may be underway
There are some trip-offs that complex correction may be occurring.
When wave A fails to penetrate a trend line drawn between wave 2 and 4 of the previous impulse wave, there is a better than average chance you will have a complex correction form, no matter whether wave c drops to a normal level thereafter.
When the A,B,C retracement looks complete, but has not achieved a minimal Fibonacci retracement level.
CONTENT OF ELLIOTT WAVE CHEAT SHEETS
1 Home Rules and Guidelines Applicable to All Motive and Corrective Waves
2 Wave 1 Characteristics and Structure
3 Wave 2 Characteristics and Structure
4 Wave 3 Characteristics and Structure
5 Wave 4 Characteristics and Structure
6 Wave 5 Characteristics and Structure
7 Wave A Characteristics and Structure
8 Wave B Characteristics and Structure
9 Wave C Characteristics and Structure
10 Extensions Structure and Trading
11 Fibonacci Targets Price Targets for Retracement and Extension
12 1-2/1-2 Structures Wave 1-2 /1-2 Characteristics
13 Zigzags Structure and characteristics
14 Flats This is All FLAT Rules
15 Triangles Triangles (3-3-3-3-3) Description and samples
16 Complex Corrections Characteristics of Complex Corrections (Combinations)
17 Declaring X Waves When to declare an X wave and a complex correction
18 Ending Diagonals Description and samples.
19 Leading Diagonals Description and samples. This is quite rare.
21 Channeling How to Use Channels to Identify Waves
22 Correction Times Use the appropriate time frame to analyze the correction.