Elliott Waves Theory – Triple Three Running Patterns
So far we looked at the concept of a running correction and said that this kind of a corrective wave will always end above (in a bullish trend) or below (in a bearish trend) than the end of the previous wave. Moreover, the overall idea is that a running pattern or correction is followed by an explosion in the same direction as the one of the previous trend. This explosion, or the move to follow, is being around 161.8% of the length of the previous move prior to the running correction. However, that is only the minimum distance for the price to travel, as most of the times it is exceeded with levels like 261.8% or even 461.8% being reached. The overall idea when counting waves with the Elliott theory is to look for running corrections to form in two places: either as the 2nd wave in an impulsive move, or the b-wave in a zigzag. As a rule of thumb, it is not possible to have a running correction as the b-wave of a flat pattern because in a flat the b-wave is supposed to end beyond the 61.8% retracement when compared with the previous a-wave.
What Makes a Triple Three Running
Out of the two possibilities mentioned above, a triple three running pattern is most likely to be found as the 2nd wave in an impulsive move. This is due to the fact that the pattern is one of the most complex ones Elliott discovered, if not the most complex one. A triple three running pattern is having, like the name suggests, three simple corrections that are being connected by two different x-waves, or intervening x-waves. These three corrections go in the opposite direction than the one of the previous trend, while the x-waves are large ones that move well beyond the 61.8% ratio of the previous correction.
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Three Simple Corrections
The three simple corrective waves that make up the triple three running are the ones we covered so far here on the Forex Trading Academy project under the simple corrections topic: zigzag, flat, triangle. It is not possible for the first correction in a triple three running to be a triangle! However, it is most likely that the second and the third corrections will be triangular patterns. In order to properly identify the nature of such a triangle, please refer to the articles dedicated to how triangles are forming and how to trade them. Leaving the triangle aside from the first correction, it means that the only real possibilities that remain are for price to form either a flat or a zigzag to start the triple three running. Out of these two, a zigzag is unlikely, while a flat is the pattern to be met most of the times. Any kind of a flat pattern is possible to appear here, as long as it is not being confirmed as a simple correction. Therefore, look for all kind of b-wave retracement that define a flat to be found here. The triangles that are supposed to follow after the two x-waves are either contracting or expanding. An expanding triangle is a rare formation anyways, so look for a contracting one to appear. Out of the contracting triangles, either horizontal or irregular one are suitable to appear here, but a running triangle is not out of the question as well. The way to trade these triangles is to simply trade them as normal ones, as independent patterns, and this implies to patiently wait for the b-d trend line to be broken. The moment the trend line is broken, it is usually retested (triangles at the end of complex corrections like this one are supposed to be retested), and such a retest might give the perfect entry. Remember that a trader doesn’t really know if the pattern will be a double or a triple three running!What makes a difference between the two is the nature of the move that follows after the first triangle in the complex correction. If that move is a corrective one, then it is clear that another x-wave is following. On the other hand, if the move is impulsive, we can safely say that price started the third wave in a five waves structure.
Two Large X-Waves
When compared with the double three running, a triple three one has two large x-waves. These waves are corrective in nature (all x-waves are corrective) and not only that they will retrace more than 61.8% of the previous corrective wave, but they will move beyond the start of that correction. So powerful these two x-waves are, that the trader would have the impression that the impulsive wave for the 3rd wave of a bigger degree already started. This is not true of course due to the fact that the x-waves are corrective patterns. As for the structure of the two x-waves, they are most likely complex zigzags like a double or a triple zigzag, but one should not rule out double or triple combinations as well. If a double or triple combination is the pattern thought to form, then the triangle at the end of these combinations will either have a rising slope (in a bullish trend) or a falling one (in a bearish trend). In a way, triple three running patterns are resembling triple combinations. The only difference between the two is the fact that a triple combination has the three simple corrective waves connected by two small x-waves, while a triple three running has two large x-waves. The same is valid for a double combination vs. a double three running. If the first one has a small x-wave as the intervening wave, the later one has a large one. While traders are not familiar with these patterns, they are extremely common on the forex market. These triangles at the end of complex corrections are usually forming ahead of important economic events that are meant to be followed by a sharp move. Such events are Non-Farm Payrolls released on the first Friday of each month, press conferences or interest rate decisions, as well as speeches central bankers hold, like testimonies in front of national Parliaments, etc. Ahead of such events, markets are consolidating in ranges and then a powerful break comes. Usually, such breaks are coming at the end of complex corrections, and one of the most complex forms for such a correction is the triple three running.
Other educational materials
- Double and Triple Running Flat – The Most Powerful Corrective Pattern
- The Waterfall Effect – Using Fibonacci to Find Targets
- Patterns with Failures – What Are They and Their Implications
- Overlapping Between Corrective Waves
- How to Use the Golden Ratio in Complex Corrections
- Introducing Double and Triple Flats
Recommended further readings
- “The predictive success and profitability of chart patterns in the Euro/Dollar foreign exchange market.” Ben Omrane, Walid, and Hervé Van Oppens. (2004).
- Volatility and Structure: Building Blocks of Classical Chart Pattern Analysis. Chesler, D.L., Handbook of Finance.