Spread between the Buying and Selling Price

Correlation between currency pairs, price developments and indicators are thought a trader has to give consideration to.

Another consideration in trading currencies is the spread between the buying price and the selling price.

Purpose of this post

The purpose is to give some examples and a general idea of currency pairs with different spreads.

The content is only illustrative.

What is a spread between the buying and selling price

A spread is the pips between the price the currency pairs are brought at and the price they are sold at.

Why look at the spread

The wider the spread is the longer it will take to get profit.

Currency pairs with different spreads

Examples of different currency pairs with different spreads; the prices and the spreads are from the 18 of December 2013 from one of the trading platforms; the spreads could vary from other trading platforms.

Currency pairs with a 2 pips spread

EUR/USD	1,3741	1,3743
AUD/USD	0,8904	0,8906
USD/JYP	103,06	103,08

Currency pairs with a 3 pips spread

EUR/JYP	141,60	141,63
NZD/USD	0,8246	0,8249

Currency pairs with a 4 pips spread

EUR/CHF	1,2205	1,2209
EUR/AUD	1,5430	1,5434
USD/CHF	0,8880	0,8884
GBP/USD	1,6376	1,6380

Currency pairs with a 5 pips spread

USD/CAD

1,0642

1,0647

Trading Gold

The posts on this blog have been about trading currency pairs; in this post is the content about commodities. The commodity is gold.

Gold

Gold is a commodity and the most of it comes from India and is used in jewelry and industries.

Impact on the price of gold

Industries

The demand and supply of these industries have an impact on the pricing.

Big events

Big events as the Indian wedding seasons (from September to December) have also impact on the price.

The dollar, inflation and interest rate

The price of gold is valued in dollars which makes the price of the dollar an element in the pricing. As currencies are influenced by the inflation rate and the interest rate are they also factors that influence the price of gold.   

The inflation is measured by the consumer price index (CPI); if the inflation starts to rise the impact of the gold price is negative which means that the price will fall on gold.

Before starting to hedge gold and inflation it would be a good idea to know the inflation rate around the world as the inflation's impact on the gold is not equivalent cause to the calculation of the inflation rate.

The price of gold

The price of gold in 2013 has been bearish; as it is decreased from 1.780 dollars in October 2012 to 1.230 in December 2013.

In the short run gold has been bullish and bearish.

How to buy gold

Gold can be brought on an online CFD trading platform; gold is placed under the section commodities.

More about how to trade on an online trading platform is illustrated in the video on my website.  

Trading CFD: Correlation between AUD/CHF, AUD/USD and EUR/USD

In the post CFD Trading: Correlation between Currency Pairs is written about some common correlation between currency pairs.

In this post

In this post is the focus on the correlation between the AUD/CHF and AUD/USD. The correlation between the AUD/CHF and the EUR/USD is also illustrated.

The purpose is illustrative only.

Correlation

The correlation between currency pairs can be stronger or weaker over a time period. 

In this post is illustrated how the correlation is at the 15 minute charts; the correlation could be stronger or weaker if the correlation was illustrated in charts where the time period was longer or shorter.

Often is the correlation strong or weak as illustrated. The correlation can also be opposite as illustrated in the charts from 10:45.

The correlation between AUD/CHF and AUD/USD

The charts illustrate the correlation between the AUD/CHF and AUD/USD; the charts illustrate a positive correlation between the currency pairs.

The correlation is weaker at 10:45 than it was between 1:45 and 10:45 as the AUD/CHF is decreasing and the AUD/USD becomes flatter.

The correlation between AUD/CHF and EUR/USD

The charts illustrate the correlation between the AUD/CHF and EUR/USD; the charts illustrate a negative correlation between the currency pairs.

The correlation is weaker at 12:30 than it was between 1:45 and 10:45 as the AUD/CHF is increasing and the AUD/USD is increasing.

Correlation between NZD/USD and EUR/USD, GPB/USD, AUD/USD

Correlation between currency pairs is a factor in trading CFD and should be considered before entering a trade.

In this post is the correlation between the NZD/USD and EUR/USD, GPB/USD, AUD/USD illustrated visual in the charts under the section Visual illustration. The purpose is to exemplify the correlation between currency pairs and give a little inspiration on how to think as a trader.

The correlation between NZD/USD and EUR/USD, GPB/USD, AUD/USD are usually strong as changes in the USD has effect on all the currency pairs in the same direction.

Visual illustration

Visual are the charts NZD/USD and EUR/USD, GPB/USD, AUD/USD illustrated; the charts illustrate how the currency pairs are moving in the same direction with a small delay. 

The NZD/USD is increasing (bullish) approximately at 2:15 and again at 9:45 which is also the case for the EUR/USD, GPB/USD and AUD/USD; some of the currency pairs start to rise (bullish) at approximately 9:00 o’clock.  The EUR/USD is rising (bullish) for a shorter period than the NZD/USD, GPB/USD and AUD/USD. 

CFD Trading: Goals

I have been studying the tropic positive psychology a bit deeper the last couple of months.

One of the interesting part is that well-being is valued higher when a person can explain why he or she is at certain points in life but also can explain how to come to the next level.

Another interesting part is that well-being is connected to grow and our well-being is increasing as we grow but only if we have an influence on the progress. Well-being can also be life stages where the goals are reached and where the feeling complacency and tranquility is present.

Well-being in connection to CFD

Well-being is also important in trading CFD as we have to set goals for our trading; the purpose is to measure if we reached our goals. An example of a goal could be a surplus of 20 pips each trading day.

A trading plan is also important as it explains why you are acting as you are; it explains also your goals and if you have reached them; in connection to positive psychology should it have influences on your well-being as you know why you are entering a trade and why you are closing a trade.

Writing your goals

Writing a trading plan makes you more conscious about the goals you want to achieve and how to achieve them. Your conscious about your goals makes it also easier to reach them.

More about psychology trading

In the articles;

·    Forex Online Trading? How to ImproveYour Forex Trading With Visualization Techniques 

·    Forex Online Trading? HowVisualization Techniques Can Improve Skills To Enter A Trade 

are written about visualization techniques that might be helpful in growing your well-being in trading CFD.

CFD Trading: The Risk and the Reward Fraction

CFD trading has large potential rewards and potential risks. In this post is the purpose to write about the risk and the reward in a trade.

Risk and reward

A risk in a trade is the possibility to lose money on a trade. A reward is the possibility to earn a profit in a trade.

The fraction between the risk and the reward should be 1:3 or more for new traders. If the risk is 25 dollars is the expected reward 75 dollars. The 25 dollars is the stop loss level and the 75 dollars are the profit takes level.

The fraction for experienced traders could be set to 1:2.

How to use the risk and the reward fraction?

The risk and reward fraction is an overall fraction in a trading plan; if the fraction is set to 1:3 in each trade during a trading day is the overall fraction also 1:3.

Example: The trades

The trading day consists of 6 trades; the profit takes are set to 60 dollars; as the risk and the reward fraction is set to 1:3 is the stop Loss level set to 20 dollars.

Three of the trades are closed due to the profit takes and two of them are closed due to the stop loss level.

The profit is 120 dollars; 3 times 60 dollars minus 3 times 20 dollars.

Example: A trade is added to the trading day

The trader adds a trade in his trading plan but the trade is closed due to the stop loss level.

The profit is 100 dollars; 3 times 60 dollars minus 4 times 20 dollars.

Example: Conclusion

In the example are the risk and the reward fraction as planned but shrink as the trader adds a trade.

The trader’s planned fraction is lower than expected as he added an extra trade in his trading plan; but he still has a surplus.

Stop Loss

It is difficult for both new traders and more experienced traders to set a stop loss level.

Examples of how to set a stop loss level is in the article “Trading Forex Online? How to Define an Exit Point, AlsoCalled a Stop/Loss?” .

CFD Trading: Correlation between USDCAD and GBPUSD

In the last post was the correlation between the EURUSD and USDCHF illustrated.

In this post is the correlation between the USDCAD and the GBPUSD illustrated. The purpose is only illustrative and inspirational in trading the USDCAD and GBPUSD.

Correlation between USDCAD and GBPUSD

I was watching the USDCAD and the GBPUSD on the charts and the visual correlation is that if the USDCAD is going sideways is the GBPUSD often in and uptrend or in a downtrend.

The trend of the GBPUSD should not affect the USDCAD if it is going sideways.

An Example

The charts are the USDCAD and the GBPUSD; the USDCAD is going sideways and the GBPUSD is in an uptrend; the GBPUSD trend does not affect the currency rate on the USDCAD as it is going sideways.

Another example

The first example was over a longer time period; this example is over a shorter time period.

The currency pair is the USDCAD and the GPBUSD: the USDCAD is going sideways and the GBPUSD is in an uptrend; the GBPUSD trend does not affect the currency rate on the USDCAD as it is going sideways.

Comment

Please leave a comment if you have some interesting correlation between currency pairs. 

CFD Trading: Correlation between Currency Pairs Part 2

In the post CFD Trading: Correlation between Currency Pairs is written about the correlation between the currency pairs.

In this post is illustrated the correlation between the EURUSD and the USDCHF; the correlation between the EURUSD and the USDJYP is also illustrated.

Correlation between EUR/USD and USD/CHF

The chart illustrates the EURUSD and the USDCHF; the EURUSD starts to fall around 3 o’clock and the USDCHF starts to rise around 3 o’clock; the 4, 9 and 18 period moving averages are also crossing each other around 3 o’clock; they are reverse; at the EURUSD chart are the 18 period line above the 4 and 9 period lines; at the USDCHF chart are the 18 period line below the 4 and 9 period lines.

Correlation between EUR/USD and USD/JYP

The chart illustrates the EURUSD and the USDJYP; the EURUSD starts to fall around 3 o’clock and the USDJYP starts to rise around 3 o’clock; the 4, 9 and 18 period moving averages are also crossing each other around 3 o’clock; they are reverse; at the EURUSD chart are the 18 period line above the 4 and 9 period lines; at the USDJYP chart are the 18 period line below the 4 and 9 period lines. 

The charts are illustrative but the print is from a real chart; the correlation between currency pairs is stronger or weaker over a time period. 

CFD Trading: Trading with the 4, 9 and 18 Period Simple Moving Average

The simple moving average is described in the post CFD Trading: The Simple Moving Average.

In this post is described how to trade with the 4, 9 and 18 period simple moving average and how to read the signals they provide.

The 4, 9 and 18 Period Simple Moving Average

The 4, 9 and 18 period moving average is a common used.

When the 4 and 9 period moving average crosses each other is the first signal given that a change is in the price development is started. The change is confirmed when the 4 and 9 moving average is above the 18 period moving average.

An example

In the image is the AUDUSD price chart; in the chart are the 3 simple moving averages; the 4 period is the blue line; the 9 period is the lime line and the 18 period is the red line.  

The example illustrates how the price line starts to change from and up going development to and down going development as the three simple moving averages is crossing each other as described in the beginning of this post.  

The same price line is in the image below illustrated with price bars.

Trading with the ADX/DMI, MACD/DMI, Bollinger Bands and Stochastic

In earlier posts is the ADX/DMI, MACD/DMI, Bollinger Bands and stochastic illustrated.

Purpose of this post

In this post is the purpose to analyzing the EUR/USD with the four indicators. The purpose is to illustrate the thought in using the indicators.

How to analysis with the ADX/DMI, MACD/DMI, Bollinger Bands and Stochastic?

The chart is the EUR/USD and illustrates the price chart in the morning: from 7:15 until 9:15 is the price falling; at 9:15 is the price starting to increase.

Bollinger Bands an the stochastic

Between 9:15 and 9:30 is an indication that the price is starting to move in an upper direction; the lower Bollinger band and the price line are crossing each other and the stochastic is indicating that the EUR/USD is oversold.

Between 10:30 and 10:45 is the upper band crossing the price line and the stochastic is indicating that the EUR/USD is overbought.

ADX/DMI: How strong is the trend?

Between 9:15 and 9:50 is the red line above the green line; it indicates that the trend is negative.

At 9:50 is the green line crossing the red line; it indicates that the trend is positive and the price is increasing.

MACD/DMI: How likely is the trend?

Between 9:15 and 9:50 is the blue line above the green line; it indicates that the trend is unlikely. The histogram confirms the indication.

At 9:50 is the green line crossing the blue line; it indicates that the trend is likely and the price is increasing. The histogram confirms the indication.

When to buy?

The Bollinger bands and the stochastic indicate that the buy signal is between 9:15 and 9:30 as the lower band cross the price line and the stochastic indicates that the EUR/USD is oversold.

The ADX/DMI and MACD/DMI indicates that the buy signal is at 9:50.

The entry in the market would be at 9:50 as the ADX/DMI and MACD/DMI indicate a likely trend.

At the same time period is the stochastic in an overbought zone; which would have been a signal that the price soon will start to fall. It would have been true if only the Bollinger Bands and the Stochastic was used as indicators.

In this analysis is also the ADX/DMI and MACD/DMI used; they confirm a likely up going trend.

When to sell?

At 10:00 are the upper band and the price line crossing each other; the price is still increasing and the trend is likely.

At 10:40 are the price line and the upper band again crossing each other and the trend is less likely. The stochastic is also indicating that the price is decreasing.

The analysis indicates that the sell signal is at 10:40.

Please note

Please note that this post is only illustrative and the purpose is to give insight into how to trade with indicators.  

CFD Trading: Correlation between Currency Pairs

One of the problems as a trader and as a new trader is to discover how the market works. In previous posts are illustrated some of the common chart patterns and some of the common indicators.

In this post is the mind on the currency pairs. The idea is to illustrate the correlation between the currency pairs. The posts are only illustrative and only the correlation between the currencies will be illustrated.

The idea is to get started as a trader or move forward in the thought as a trader. Please leave a comment about correlation between currency pairs if you want to share some of them.

Social investment network

Just before I write about the currency pairs I will place a link to the social trading platform called eToro Social Investment Network; it is a platform where traders socialize about trading CFD.

EUR/USD and USD/CHF

The EUR/USD and the USD/CHF are often a mirror; the currency pairs move in the opposite direction. Is the EUR/USD bullish is the USD/CHF bearish and vice versa.

It is a rule which means that they can move in the same direction as well.

EUR/USD and EUR/GPB

The EUR/USD and EUR/GBP move most of the trading time in the same direction but could also move in reverse direction.

USD/CHF and USD/JPY

USD/CHF and USD/JYP are also currency pairs that often move in the same direction most of the trading time.    

It is a rule which means that they can move in the opposite direction as well.

An example:  How to use the information about the correlation between the currency pairs?

Watch the EUR/USD chart pattern; is the pattern bearish or bullish? Is the pattern bearish? Watch the USD/CHF chart or the USD/JPY chart for an entry in the market.

Please note

This post has illustrated some common correlation between currency pairs and is only inspiration to get started as a trader or move forward in the thought as a trader.

The correlation between the currency pairs can be stronger or weaker over time.

Trading CFD with the indicators ADX/DMI and MACD/OsMA

In an earlier post is the content about the ADX/DMI and the MACD/OsMA.

What are the MACD/OsMA and the ADX/DMI?

The MACD/OsMA and the ADX/DMI point out how the price trend behaves.  

The ADX/DMI analyzes the strengths of the trend; the MACD/OsMA analyzes how likely the trend is.  

In the post Trading Forex using the trading strategy123 trading signals is the two indicators described. 

How to analyze the price behavior using the MACD/OsMA and the ADX/DMI?

In the graph are the USD/CHF price line; the indicators ADX/DMI and the MACD/OsMA are at the button of the image.

ADX/DMI: How strong is the trend?

Between 8:15 and 9:00 is the DI+ and DI- line crossing each other; the DI+ starts to move higher than the ADX line; between 10:30 and 12:45 is the DI+ starting to get near the ADX line; in the same time period is the DI- moving closer to the ADX line.

MACD/DMI: How likely is the trend?

The MACD line crosses the signal line between 8:15 and 9:00 and the histogram starts to grow; between 10:30 and 11:15 starts the histogram to fall.

When to buy and when to sell?

A likely buy point would be between 8:15 and 9:00 as illustrated in the image with the indicators signal in mind; the sell point will be around 12:45 as the image illustrates with the indicator signals in mind.

Where to trade with the MACD/OsMA and the ADX/DMI?

PLUS500 offers the traders to trade with the MACD/OsMA and the ADX/DMI. The list of indicators is at the f(x) button on the trading platform.

If you would like to download the trading platform at PLUS500 and try it with the 25 euro welcome bonus click on this link for more information.

Please notice that your capital may be at risk trading CFD.

CFD Trading: The Simple Moving Average

The Simple Moving Average is an indicator that calculates the future price movement of the past.

Equation

Is the indicator based on a 10 period timeframe is the future price calculated from the past 10 prices. The equation is

(Price 1 + price 2 + price 3 + price 4 + price 5 + price 6 + price 7 + price 8 + price 9 + price 10) / 10 time period = Future price

Time period

The equation is simple which makes the simple moving average best in a trend-following market. The timeframe has also an impact on the calculated price; the longer the time period is the slower is the simple moving average to react on trend changes in the market.

Purpose

The simple moving average purpose is to find the trend changes in the market. The indicator is an indicator that should not stand alone in the decision to enter a trade.

The Simple Moving Average illustrated in a graph

In the graph is the simple moving average illustrated; the graph illustrates a blue line, red line and a green line; the blue line is the simple moving average based on a time period of 10; the red one is based on a time period of  20 and the green one is based on a time period of 50.

The green line responds later than the red and blue line.

The second indicator is the stochastic. The purpose is to verify the simple moving average.

When to enter a trade?

The green, red and blue line gives different indications on when to enter a trade as they are based on different time periods.

When the simple moving average is above the price line is the price bearish and bullish when the price line is below the price line.

The stochastic gave an indication at the time where the simple moving average crosses the price bar; around 7 o’clock the 10-10. The stochastic is also in a downtrend which indicates that the price is increasing as the price is moving away from the overbought zone. The indication is at the tops at the stochastic; they are getting lower and lower.     

Try the simple moving average

Which time period is best when a trader use the simple moving average is individualized; the trader have to try different time periods or place the simple moving average with different time periods at the same time as illustrated in the graph.

Where to trade with the simple moving average?

The CFD trading platform PLUS500 offers the traders the simple moving average as an indicator. The list of indicators is a the f(x) button on the trading platform.

Watch the review of PLUS500 or download the trading platform from their website from this link.

Please notice that your capital may be at risk trading CFD.

Trading Forex, Stocks, Commodities and Indices from your Mobil Phone

A new video from Plus500 is illustrating how to trade on their online trading platform from a mobile phone.

Plus500 is a simple and user-friendly trading platform offering a 25 Euro welcome bonus.

Link to Plus500’s website is on this link. 

Please notice that your capital may be at risk trading CFD.

Harmonic Trading: AB=CD Pattern

In the last post was the focus on the three drive pattern and harmonic trading. In this post is the focus on the AB=CD pattern.

AB=CD Pattern
In an AB=CD pattern is A-B = C-D; the time duration between A to C is the same as the time duration between B to D. 

The same time duration is in this context approximately the same time duration. An example is a 20 week time duration from A to C and 15 weeks time duration from B to D.  

AB=CD Pattern and the Fibonacci numbers
The AB=CD pattern is a pattern that indicates a trade opening with the Fibonacci numbers 0,618, 0,789, 1.27 and 1.618.

The calculating in the AB=CD pattern is

AB=CD

AB*1, 27=CD

AB*1, 618=CD

Illustration of the AB=CD pattern
In the image are a bullish and a bearish pattern illustrated

Bullish Pattern

The image illustrates a bullish AB=CD pattern with the Fibonacci numbers 0,618, 0,789 (AB) and the CD numbers 1,27 and 1,618.

A buy opening is likely if the price curve is in the harmonic area 0,618, 0,789, 1,27 and 1,618 at point A, B, C and D; the buy opening is likely as the AB=CD pattern indicate a rise in the price curve.

A stop loss should be a couple of pips below point D; remember that a stop loss is set individually and that the numbers are not exact numbers but numbers in an area; a harmonic area.

Bearish Pattern

The image illustrates a bearish AB=CD pattern with the Fibonacci numbers 0,618, 0,789 (AB) and the CD numbers 1,27 and 1,618.

D is a likely sell point if the price curve is in the harmonic area 0,618, 0,789, 1,27 and 1,618 at point A, B, C and D; the sell is likely as the AB=CD pattern indicate that the price curve decrease.

A stop loss should be a couple of pips above point D; remember that a stop loss is set individually and that the numbers are not exact numbers but numbers in an area; a harmonic area.

Calculating the AB=CD pattern in a spreadsheet
An example of how to calculate an AB=CD pattern in a spreadsheet is illustrated in the images below.

Spreadsheet; bullish AB=CD pattern

Spreadsheet; bearish AB=CD pattern

Conclusion
In this post is illustrated how an AB=CD pattern looks like and how a spreadsheet could look like calculating an AB=CD pattern.

The purpose in this post is illustrative and only the basic in the AB=CD pattern is illustrated as the Fibonacci numbers could be more extreme than the numbers used in this post. The numbers used in this post is the ideal numbers in an AB=CD pattern.

In some AB=CD patterns are the AB=CD pattern also in the main AB=CD pattern.

Harmonic Trading: Bullish and Bearish Three Drives

Harmonic trading is a trading technique recognizing a specific pattern with the Fibonacci ratios. The technique assumes the patterns repeat themselves.

Harmonic trading is to identify these patterns and to identify when to enter or exit a position based on the historic cycles in the patterns.

The patterns are not 100% accuracy in connection to the Fibonacci ratios but approximately to the numbers. The important is to recognize the pattern.

The technique is useful to any time frame.

The Fibonacci Numbers
Harmonic Trading is based on the Fibonacci ratios. The primary ratios are the numbers 0.618, 0.786, 1.27, 1.618 and the secondary numbers are 0.382, 0.50, 1.00, 2.0, 2.24, 2.618, 3.14.

The most used numbers are the primary numbers; the ratios 2.24, 2.618, 3.14 are considered as extreme numbers.

The ratios are used to identify the cycle in the historical pattern and to identify the entry point, exit point and stop loss.

The Three Drives
A three drive is a 3 wave pattern following the Fibonacci numbers. The pattern could be a bearish or a bullish pattern.

A Bearish Three Drives
The pattern is illustrated in the image

The image illustrates a three wave cycle; the impulse waves are the Fibonacci numbers 1,27 / 1,618 and the corrective waves are the 0,618 / 0,786. At the point (3) the pattern will end and the price curve will be bearish. Point (3) is the exit point.

Calculation - Fibonacci numbers 0,618 and 1,27
An example; the price is 40 and rise to 50; the pattern rise with the numbers 0,618 and 1,27; the calculation is

0 – 1 (corrective wave)
40 – 50 =  10 * 0,618 = 6,18
50 – 6,18 = 43,82

1 – 2 (impulse wave)
40 – 50 = 10 * 1,27 = 12,7
43,82 + 12,7 = 56,52

1 – 2 (corrective wave)
40 – 50 = 10 * 0,618 = 6,18
56,52 - 6,18 = 50,34

2 – 3 (impulse wave)
40 – 50 = 10 * 1,27 = 12,7
50,34 + 12,7 = 63,04

63,04 is the exit point if the Fibonacci numbers are 0,618 and 1,27.

A Bullish Three Drives
The pattern is illustrated in the image

The image illustrates a three wave cycle; the impulse waves are the Fibonacci numbers 1,27 / 1,618 and the corrective waves are the 0,618 / 0,786. The pattern will end at the point (3) and the price curve will be bullish. Point (3) is the stop loss point and the entry point.

Calculation - Fibonacci numbers 0,618 and 1,27
An example; the price is 50 and decrease to 40; the pattern decreases with the numbers 0,618 and 1,27; the calculation is

0 – 1 (corrective wave)
50 - 40 = 10 * 0,618 = 6,18
40 + 6,18 = 46,18

1 – 2 (impulse wave)
50 - 40 = 10 * 1,27 = 12,7
46,18 - 12,7 = 33,48

1 – 2 (corrective wave)
50 - 40 = 10 * 0,618 = 6,18
33,48 + 6,18 = 39,66

2 – 3 (impulse wave)
50 - 40 = 10 * 1,27 = 12,7
39,66 - 12,7 = 26.96

The entry point and stop loss are set at the price level 26,96 if the Fibonacci numbers are 0,618 and 1,27.

Elliott Wave Theory: Triangle Pattern

In an earlier post and in one of my earlier articles is written about the triangle pattern and the Elliot waves. The post and the article are on the following links

• “Chart Pattern: The Triangle Pattern”
• “Trading Forex Online? What Are Elliott Waves?”  

Focus in this post and the Elliot wave theory 
In this post is the focus on the triangle pattern in an Elliot wave; the focus is also on possible entry in an Elliot wave with a triangle pattern. The article “Trading Forex Online? What Are Elliott Waves?” described the theory; just to make the theory more understandable is the theory illustrated in the images.

The impulse and corrective waves 
The first image illustrates the Elliot wave theory; the impulse and corrective waves; the image illustrates also the pattern in the waves. 
The corrective waves 
The corrective waves are on the first image placed as a correction just after the last impulse wave; wave number 5. On the image below is the corrective waves also placed between the impulse waves as an A, B and C pattern. 
In the image is the corrective pattern illustrated as an A, B, C pattern; the pattern is a “zigzag” pattern but could also have been a “flat pattern” or both; a “zigzag” and “flat pattern” as in a triangle pattern.

The Elliott waves and the triangle pattern 
A triangle pattern is an A, B, C, D and E pattern that ends with a breakout; in the image is the triangle pattern between the 3 and 4 impulse waves; a good place to enter a trade as the impulse wave; number 5; isn’t the shortest of the 5 impulse waves.

 If the price develops as the theory describe an entry is made at E4.