In Wave Analysis there is such a notion as “wrong top” (very often in practice the term “orthodox top” is also used). This is one of the most ambiguous ideas of R. Elliott.
Elliott argued that when wave 5 of an impulse is stretched, the subsequent bear market will take one of the forms.
The first option. A prolonged horizontal correction will begin, in which wave (A) will be extremely small, compared to wave (C). Wave (B) capable of forming a maximum is considered to be a “wrong” top. It is so because it occurs immediately after the end of the fifth wave.
The second option. A prolonged horizontal correction will become a part of a larger correction. In the example shown, the “wrong top” is formed by a regular plane, which is located in wave (A) of a higher degree plane.
The variants are shown in Fig. 1.49.
(Figure 1.49)
This concept is questioned by modern waveformists.
In the 20’s and 30’s there were two stretched waves (5) of the primary degree, which gave rise to such a peculiarity of the markup. To turn the stretched wave (3) into a stretched fifth wave, Elliott developed the theory A-B-C, which was called the “irregular correction of type 2”.
In his words, the wave (B) cannot reach the beginning (A) and (C) cannot reach the end (A). This method was often used by Elliott to mark out the second waves of impulses. The consequence of this method was the appearance of two extra waves at the peak of the market, which were removed by means of “wrong tops”.
In other words, the “incorrect type 2 correction” allowed to eliminate the first two sub-waves of the stretching, while the “incorrect top” explained the formation of two extra waves at the top.
Thus, the “wrong type 2 correction” and the “wrong top” were used by Elliott to mark out the fifth wave stretch of the impulse. The two incorrect concepts were generated by an identical error.
From the calculation in Fig. 1.50 we can see how the “wrong A-B-C type 2 correction” in the second wave of the impulse, leads to the necessity of using the “wrong top”. This construction does not contain errors, but its use does not make sense, because there are alternative variants of markup, the probability of implementation of which is much higher due to their simplicity and harmonicity.
(Figure 1.50)
Sources: by J. Frost and R. Prekter: “Eliot’s Wave Principle. The Key to Market Behavior” 2005