ABC Wave Theory

ABC Wave Theory is a component of the broader Elliott Wave Theory, describing the corrective phase that follows a completed five-wave impulse move in the direction of the primary trend. The corrective sequence consists of three waves: Wave A (the initial move against the primary trend), Wave B (a partial retracement back in the direction of the primary trend — often misleading traders into believing the correction is over), and Wave C (the final leg of the correction, typically equal to or larger than Wave A, completing the corrective structure). The ABC correction can take various forms including zigzags, flats, and triangles, each with different characteristics and implications for the subsequent trend resumption. In Indian equity markets, ABC Wave analysis is used by Elliott Wave practitioners to identify the end of corrective phases in Nifty 50, Bank Nifty, and individual stocks — providing high-probability entry points into the direction of the primary trend once Wave C appears to be completing near a key support or Fibonacci retracement level.