A flat wave in Forex trading refers to a specific correction pattern in Elliott Wave Theory. Flat waves are generally sideways corrective patterns, indicating a market is consolidating after a significant move. In a flat wave, the market moves in three distinct waves: A, B, and C.

Wave A usually moves counter to the prevailing trend, but not strongly. Wave B often retraces most or all of Wave A, making it appear as if the previous trend will continue. However, Wave C moves in the same direction as Wave A, completing the correction but typically without going much further than the end of Wave A.

Flats are considered a form of consolidation, often signaling indecision in the market. They can appear in both bullish and bearish trends, temporarily pausing the price movement before the main trend resumes. For traders, flat waves offer opportunities for short-term trades, but they can be tricky due to the choppy and range-bound nature of the market during these formations.

Understanding flat waves is essential for traders using Elliott Wave Theory, as they can help predict when a trend might resume after a period of consolidation or correction.