# How to Trade Sideways Combinations

### Video Transcription:

Hello, traders. Welcome to the Elliott Wave Theory course, and the second module, Elliott Wave Patterns. In this lesson, we will go through the actual charts and we are going to try to trade a sideways combination. Well, actually I’m going to teach you how to trade it, but I’m also going to teach you how to not get trapped inside of it. You’re going to see that a sideways combination is actually a very blurry price action and it’s very choppy. If you know what to look for and if you know your Elliott Wave Theory, you’re going to be able to count the waves and you are going to be able to get out or better yet not get trapped inside of the trap.

Let’s go to this U.S. Dollar/Japanese Yen daily chart. You can see that we have had an explosive move to the upside, and right here we are going to look at this price action in the chart. Let me just get rid of this one. First of all, you need to understand that a sideways combination comes after a very big move to the upside. You can see that this move goes from. . . If this is the end of wave 1 from this low to this high, this will be wave 2, a small retracement to the downside. If you remember in the Elliott Wave Theory Module 1, when we have a steep, corrective wave 2, we are going to have a flat-ish corrective wave 4. Now this can be at the end of wave 3. And if this is the end of wave 3, we are going to have a flat-ish corrective move. This is wave 3 and we know that this is the end of wave 3 because this corrective move to the downside completely breaks with the prior price structure which is a very steep move to the upside.

Now let’s start by looking at what we have here. And what we have here, I think, is a very nice flat pattern. Let’s grab our Fibonacci retracement tools. If we measure from the end of wave 3 until the end of the first corrective wave, let’s go to the Fibo properties and let’s just add some Fibonacci retracement levels that we are going to use like the 0.764, which is actually the 76.4, and the 88.6, which we are going to be using. All right, 88.6. You can see that the second wave, which will be the end of wave B, retraceed right to the 88.6.

We have right here what seems to be an A-B-C flat. This is going to be an A-B-C flat. Let me just put the right letters into the right waves. Here’s the wave C or the flat. Here’s our wave C. Remember that we are looking right here at a sideways combination, so what we’re going to do is we are going to name this also our point X, which is the first impulse of the sideways combination. And we are looking at a 3-3-3 because you can see right here that we have the zigzag right here. And I’m sorry. This is actually a W. The first impulse of the sideways combination is W, then we have the zigzag right here which ends right here after the second impulse of the sideways combination, which we label X.

And then we have a triangle pattern. You can see it right here and right here. The first wave of the triangle, we are going to name it A, then of course the B wave right here, then the C wave. The C wave is this one right here. This is the B wave. The D wave all the way up here right here. And of course we have our buying zone right here at the E wave. Just like that, just as if this was magic, our price pushes up and breaks with the previous highs and goes to all-time highs right here for around 500 pips.

Basically if you know what to look for on a sideways correction, you are not going to be trapped inside of this choppiness. You are not going to know what to wait for, and where your buying zones are, where your selling zones are, and you are going to be able to perfectly time your entries in time and of course in price. This entry right here was giving you a nice 80 pip stop loss and has now yielded 470 pips.