Forex and Stocks Trading: Baby Bird Capital

A motive wave is a price movement in the direction of the main trend.  Motive waves always subdivide into five smaller waves. Guidelines for identifying Motive waves correctly • Wave two never retraces more than 100% of wave one • Wave four never retraces more than 100% of wave three • Wave three is often the longest and most powerful wave • Wave three always travels beyond the end of wave one Sub waves of Motive waves are always denoted by numbers There are two types of motive waves: Impulse and Diagonal waves Impulse waves This is the most common type of motive wave and they are easy to identify In this type of wave, wave four never enters wave one`s price territory. The primary objective is to propel the market to move in a certain direction, hence, wave 1, 3 and 5 are the motive waves and sub wave 3 is specifically an impulse wave. Wave Extensions Most impulse waves contain Extensions An extension is usually present in only one of the three impulse waves 1, 3 and 5. Ex...

There are twenty one corrective a, b, c patterns. These patterns are made up of three formations: Zigzag formation, the Flat formation and the Triangle formation. The Zigzag formation A single zigzag pattern is a simple three wave pattern labelled A-B-C. The sub waves of a zigzag follow a 5-3-5 pattern Wave B never retraces more than 100% of wave Correction patterns can sometimes have wave extensions. When the Zigzag pattern is extended it can form a double zigzag or a triple zigzag.  These patterns are separated by a 3 wave pattern.  A zigzag pattern is usually found in wave two. The Flat formation The difference between a flat formation and a zigzag is that the sub wave sequence of a flat is 3-3-5. Wave B usually retraces up to the start of wave A and wave C does not move beyond the end of wave A.  Flats are more common in fourth waves. A flat wave extension may result in the formation of a double flat. Triangles Triangles contain 5 waves that are labelled a-b-c-d-e. T...