A Close Look at Triple Three Running Patterns
So far we have 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) 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 that of the previous trend. This explosion, or the move to follow, is 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 time 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 forming in two places: either as the second wave in an impulsive move, or as 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?
Of the two possibilities mentioned above, a triple three running pattern is most likely to be found as the second wave in an impulsive move. This is because the pattern is one of the most complex ones Elliott discovered, if not the most complex. A triple three running pattern has, as the name suggests, three simple corrections that are connected by two different x-waves, or intervening x-waves. These three corrections go in the opposite direction from that of the previous trend, while the x-waves are large ones that move well beyond the 61.8% ratio of the previous correction.
Three Simple Corrections
The three simple corrective waves that make up the triple three running are the ones we covered earlier 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 form, and how to trade them. Leaving the triangle from the first correction aside, it means that the only real possibilities that remain are for the price to form either a flat or a zigzag to start the triple three running. Of these two, a zigzag is unlikely, while a flat is the pattern that is met most of the time. It is possible for any kind of a flat pattern to appear here, as long as it is not confirmed as a simple correction. One should therefore look for all kinds of b-wave retracements 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 anyway, so look for the appearance of a contracting one. Of the contracting triangles, either horizontal or irregular ones are suited to appearing here, but a running triangle is also not out of the question. The way to trade these triangles is to simply trade them as normal ones, as independent patterns, and this implies patiently waiting for the b–d trendline to be broken. The moment the trendline 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 whether the pattern will be a double or a triple three running! What makes the 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 to follow. On the other hand, if the move is impulsive, we can safely say that the price has begun the third wave in a five-wave structure.
Two Large X-Waves
When compared with the double three running, a triple three type has two large x-waves. These waves are corrective in nature, as all x-waves are corrective; and not only will they retrace more than 61.8% of the previous corrective wave, but they will move beyond the start of that correction. So powerful are these two x-waves that the trader would have the impression that the impulsive wave for the third wave of a bigger degree has already started. This is not true of course, as the x-waves are corrective patterns. As for the structure of the two x-waves, they are most likely complex zigzags such as double or triple zigzags, but one should not rule out double or triple combinations as well. If a double or triple combination is the pattern thought to have formed, 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 resemble 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 usually form ahead of important economic events that are likely to be followed by a sharp move. Examples of such events are Non-Farm Payrolls released on the first Friday of each month, press conferences, or interest rate decisions, as well as speeches delivered by central bankers, such as testimonies in front of national Parliaments, etc. Ahead of such events, markets consolidate in ranges, and then a powerful break comes. Such breaks usually come at the end of complex corrections, and one of the most complex forms such a correction can take 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).