to form on the daily time frame. This fact alone takes a lot of the guesswork out of determining when the pattern has confirmed. The Zig-Zag Formation, zig-zag formations are very steep moves in price that goes against the predominant trend. It can easily be currencies, bonds, gold, oil,.
The head and shoulders is the least common of the three formations we will discuss today. Were going to use stocks for our example since stocks are what. Its essentially an indecision point in the market, where the bulls and bears are battling to see who will win control. Notice how the two points above dont match up with support and resistance. If this is the case, youre far better off taking profit at the key level rather than hoping for an extended move to the objective. One thing that you also need to know about the Elliott Wave Theory is that one of the three impulse waves (1, 3, or 5) will always be extended. More often than not, forex egyptian puntas when this pattern breaks, the market will retest the broken level as new support or resistance.
Of course they are not the only price structures out there, however, they are the ones that I have come to enjoy trading the most over the years. The 5- wave trends are then corrected and reversed by 3- wave countertrends. Letters are used instead of numbers to track the correction.