Elliot Wave Theory Introduction

Elliott Wave Theory Introduction R. N. Elliott believed markets had well-defined waves that could be used to predict market direction. In 1939, Elliott detailed the Elliott Wave Theory, which states that stock prices are governed by cycles founded upon... More

Elliott Wave Theory Introduction R. N. Elliott believed markets had well-defined waves that could be used to predict market direction. In 1939, Elliott detailed the Elliott Wave Theory, which states that stock prices are governed by cycles founded upon the Fibonacci series (1-2-3-5-8-1321. . . ). According to the Elliott Wave Theory, stock prices tend to move in a predetermined number of waves consistent with the Fibonacci series. Specifically, Elliott believed the market moved in five distinct waves on the upside and three distinct on the downside: Waves one, three and five represent the impulse , or minor upwaves in a major bull move. Waves two and four represent the corrective, or minor downwaves in the major bull move. The waves lettered A and C represents the minor downwaves in a major bear move, while B represents the one upwave in a minor bear wave. Elliott proposed that the waves existed at many levels, meaning there could be waves within waves. To clarify, this mea Less