How to Trade Different Types of Flat Patterns - Forex Trading For Profit

Forex Trading For Profit

How to Trade Different Types of Flat Patterns

irregular flat
No ratings yet.

Share on...

The most difficult pattern to trade with the Elliott Waves theory is a flat pattern. There are multiple types of flat patterns, no less than ten types, and the purpose of this article is to list the most important ones and what makes the difference between them. Before doing that, a short introduction to the pattern is needed.

Flats are corrective waves, labeled with letters, a-b-c, and the first two waves are corrective with the c-wave being impulsive. No matter if trading commodities or currency pairs, the structure of a flat is the same.

 

Here are the most important types of a flat and what their interpretation should be:

  • An irregular flat is characterized by tripping stops for both bulls and bears. In such a pattern, the b-wave is longer thanthe a-wave (as such, it travels beyond the start of the a-wave, tripping those stops) and the c-wave retraces completely the whole b-wave. Therefore, all stops are triggered and traders don’t know Irregular flatwhere the market will go next. Such a flat appears as the second wave in an impulsive move or as a leg of a contracting triangle.

irregular flat

  • Common flat. Such a flat is characterized by the b-wave retracing the previous a-wave almost entirely. The minimum distance for the b-wave to travel is 80%, but most of the times it goes to one hundred percent. In any type of flat, it is important to note that the end of the b-wave matters, not the highest or lowest point in the wave. Therefore, the market may travel beyond the one hundred percent retracement level, but if that is not the end of the b-wave, it doesn’t matter. As a side note, if one compares the three waves that make the common flat, the b-wave (the wave in the middle) is usually the most time consuming one. It can appear as an x-wave in a complex correction or as the 2nd wave in an impulsive move.

 

  • Irregular failure. The flat with an irregular failure is showing a strong trend in the opposite direction. In other words, it should be faded. Depending on the time frame that appears, fading it can be an expensive move. If it appears on the daily or weekly chart, it is no fun going in the other direction. The a-wave of such a flat is a corrective wave, of course, like all the a-waves in flat patterns. The b-wave is a strong one, in the sense that it retraces beyond the 100% level. In most of the cases, it retraces beyond the 161.8% when compared with the length of the previous wave a. What traders do is they take a Fibonacci extension or retracement tool, set the 161.8% level and project it from the moment the flat started. That is the minimum level the b-wave in an irregular failure travels. The funny part is that the impulsive move that follows, or the c-wave, is not even able to completely retrace the b-wave. Nevertheless, it goes into the territory of the a-wave. Such a flat appears as the last leg of a contracting triangle or as the 4th or 2nd wave in an impulsive move.

 

Other types of flats are flats with double failure, C failure, B failure, and elongated flats. Between these, the elongated flats are interesting because they suggest a triangle of a bigger degree is forming. They can be either the whole leg of the contracting triangle or just part of that leg of a triangle.

Elongated flats are a way to forecast future price levels and their main characteristic is that the c-wave is super-long when compared with the other a and b-waves. To be more exact, an elongated flat has the c-wave bigger than 161.8% when compared with the length of the previous b-wave. So powerful is the impulsive wave, that traders live under the impression that nothing can stop it anymore.

forex trading

Share on...

Please rate this

Leave a Comment

Be the First to Comment!

Notify of
avatar
Photo and Image Files
 
 
 
Audio and Video Files
 
 
 
Other File Types
 
 
 
wpDiscuz

Forex Trading For Profit


Forex TFP

A journey of a retail trader. How to trade on the foreign exchange market and make it a lifstyle.

Comodo SSL
    Connect
  • Facebook logo
  • Twitter logo
  • YouTube logo
  • Linked in logo

We have been voted in the top 100 Forex Sites

Top-100-Badge

Forex Trading

Forex Trading For Profit, a journey of a retail trader. This website has been set up for retail traders to give answers to those seeking the same information I was when I first started trading. Forex Trading For profit endeavours to bring the most informative approch to trading forex, and shows anyone can become a successful trader no matter what your background, with some dedication, study and determination. Trading CFD's and in the foreign exchange market is a high risk investment so please read the disclaimer.


DISCLAIMER: Any advice or information that has been presented on this website and related accounts on social media forums is only general advice and is not intended for you to invest your money solely based on its contents. By viewing the content on this site you agree that it’s for educational purposes only and will not hold the Author responsible for any loss incurred by the content herein and associated online accounts or paraphernalia. Forex Trading for profit nor do the Author('s) operate under an AFSL and any product or advice sold on this site is only bought or taken as an educational product or guide from my collective experience’s and knowledge trading forex. If you invest any money into forex you do solely at your own risk.

HIGH RISK WARNING: Trading CFD’s such as forex and/or on high leverage is a high risk investment and you must make yourself aware of the potential loses you may incur. Forex trading is not suitable for all investors and you have the potential to lose all of your deposited funds or more. Any opinions or analysis of the financial markets on this site is ONLY commentary in nature and does not solicitate investment advice. Please do not invest any money based on the advice given on this site or associated accounts nor invest money that you cannot afford to lose. Past performance of any trading system or method is not indicative of future results.


Privacy policy

What information do we collect?

We collect information from you when you fill out the form. When ordering or registering on our site, as appropriate, you may be asked to enter your: name, e-mail address or phone number. You may, however, visit our site anonymously.

What do we use your information for?
Any of the information we collect from you may be used in one of the following ways:

For contact purposes and conversing requirements between staff and client.

How do we protect your information?
We implement a variety of security measures to maintain the safety of your personal information when you enter, submit, or access your personal information.

Do we use cookies?
We do not use cookies.

Do we disclose any information to outside parties?
We do not sell, trade, or otherwise transfer to outside parties your personally identifiable or business information. This does not include trusted third parties who assist us in operating our website, conducting our business, or servicing you, so long as those parties agree to keep this information confidential. We may also release your information when we believe release is appropriate to comply with the law, enforce our site policies, or protect ours or others rights, property, or safety. However, non-personally identifiable visitor information may be provided to other parties for marketing, advertising, or other uses.

Third party links
Occasionally, at our discretion, we may include or offer third party products or services on our website. These third party sites have separate and independent privacy policies. We therefore have no responsibility or liability for the content and activities of these linked sites. Nonetheless, we seek to protect the integrity of our site and welcome any feedback about these sites.

Childrens Online Privacy Protection Act Compliance
We are in compliance with the requirements of COPPA (Childrens Online Privacy Protection Act), we do not collect any information from anyone under 13 years of age. Our website, products and services are all directed to people who are at least 13 years old or older.

Your Consent
By using our site, you consent to our web site privacy policy.

Changes to our Privacy Policy
If we decide to change our privacy policy, we will post those changes on this page.

Contacting Us
If there are any questions regarding this privacy policy you may contact us using the information below.

Paul@forextradingforprofit.com.au

Back to top

© 2018 Forex Trading For Profit. · Disclaimer · Privacy policy