1. Triangle Model – Corrective Wave

The Triangle model is a corrective wave model  in financial markets. There are two common forms of the Triangle model : the Contracting Triangle (CT) and the Expanding Triangle (ET).

These models consist of a corrective structure with 5 waves, labeled as A-B-C-D-E, corresponding to a 3-3-3-3-3 structure. They move within two converging (contracting) or expanding price channels, drawn from A to C and from B to D.

The Triangle model appears in waves 4, B, and X. It never appears during wave 2 or wave A.

Triangle waves typically emerge before the final movement of the larger next-degree trend. Following the completion of this final movement, there is often a rapid and strong price reversal known as the “thrust” or “thrust after the triangle.”

2. Contracting Triangle Model 

The Contracting Triangle (CT) pattern is quite common. In this pattern, the two price channels AC and BD gradually converge

a. Principles of Contracting Triangle (CT):

• Wave A can only be a Zigzag (ZZ), Double Zigzag (DZ), Triple Zigzag (TZ), or a Flat (FL).
• Wave B can only be a Zigzag (ZZ), Double Zigzag (DZ), or Triple Zigzag (TZ).
• Waves C and D can follow any corrective pattern except for the Contracting Triangle (CT) or Expanding Triangle (ET) patterns.
• Waves A, B, C, and D must move within or near the price channels AC and BD. The intersection of these price channels must occur after the completion of wave E. The price channels must converge; they cannot be parallel to each other.
• One of the price channels can be horizontal (allowing the Contracting Triangle (CT) to take the form of a Symmetrical Triangle, Ascending Triangle, or Descending Triangle).
• Wave E can be a Zigzag (ZZ), Double Zigzag (DZ), Triple Zigzag (TZ), or an embedded Contracting Triangle (CT).
• Wave E must have a lower price range than wave D, and wave E must be longer than 20% of wave D in terms of price (0.2D < E < D).
• Either wave A or wave B must be the longest wave in terms of price. Wave E must conclude within the price range of wave A. Wave E must move within or near the BD channel.

b. Variations of Contracting Triangle wave model

• When the two converging channels AC and BD are symmetrical, the pattern takes the form of a Contracting Triangle (CT) Symmetrical.
• When the two converging channels AC and BD come together with AC being horizontal and BD sloping downward, it forms a Contracting Triangle (CT) Descending.
• When the two converging channels AC and BD come together with BD being horizontal and AC sloping upward, it creates a Contracting Triangle (CT) Ascending.
• When the two converging channels AC and BD converge while both are slanted in the same direction, either upward or downward, it results in a Contracting Triangle (CT) Running.

3. Expanding Triangle Wave

The Expanding Triangle (ET) pattern is relatively uncommon among Elliott wave patterns. In this pattern, the two price channels AC and BD expand gradually towards the right-hand side.

Principles of Expanding Triangle (ET)

• All five waves A, B, C, D, E must follow Zigzag (ZZ), Double Zigzag (DZ), or Triple Zigzag (TZ) patterns.
• Wave B must have a lower price range than wave C but be longer than 40% of wave C in terms of price (0.4C < B < C). Waves A, B, C, and D must move within or near the price channels AC and BD. Wave C must have a lower price range than wave D but be longer than 40% of wave D in terms of price (0.4D < C < D).
• Wave A must move within or near the AC channel. The intersection of the price channels must appear before the start of wave A. The price channels must diverge; they cannot be parallel to each other. No horizontal price channel is present.
• Wave E must be longer than wave D, and wave D must be more than 40% of wave E in terms of price (0.4E < D < E). Either wave A or wave B is the shortest wave in terms of price. Wave E must move within or near the BD channel.

Expanding Triangle (ET) have no variations.