Chartered Market Technician Practice Exam 2025 – Complete Prep Guide

A zigzag correction is characterized by a price movement that consists of sharp, alternating price swings, reflecting short-term volatility in the market. It typically forms after a strong trend and indicates a corrective phase within that trend, suggesting that while the price may experience significant fluctuations, it does not necessarily imply a larger reversal of the primary trend.

In the context of market analysis, zigzag corrections are often seen as a series of price movements that zig and zag, marking temporary retracements or pullbacks rather than a definitive change in overall market direction. This makes them a distinct feature associated with market corrections, emphasizing the short-term nature of the volatility and indicating that the market may still ultimately follow the prevailing trend once the correction phase concludes.

The other options present alternate interpretations that do not accurately describe the nature of a zigzag correction. For example, while zigzag corrections happen within a market trend, they are not indicative of a continuation of the primary trend since they represent a correction phase. Additionally, they do not signal a reversal in market direction as they usually form as part of the corrective process within existing trends. Lastly, zigzag patterns do not imply stabilization in market conditions but rather highlight the transient and turbulent behavior of prices during corrective phases.