Elliott Wave Theory

Elliott Wave Theory

Theory named after Ralph Nelson Elliott, who concluded that the movement of the stock market could be predicted by observing and identifying a repetitive pattern of waves.

Notes:

Based on rhythms found in nature, the theory suggests that the market moves up in a series of five waves and down in a series of three waves.

The key difference between the Elliott Wave Principle and other cyclical theories is that this theory suggests no absolute time requirements for a cycle to complete.

See also: Cyclical Stock, Ripple, Technical Analysis, Tide, Wave

---

Elliott Wave Theory

Technical market timing strategy that predicts price movements on the basis of historical price wave patterns and their underlying psychological motives. Robert Prechter is a famous Elliott Wave theorist.

---

Elliott Wave Theory

A technical tool developed in the 1930s by R. N. Elliott for explaining stock price movements in terms of the sociological factors of investor optimism and pessimism. The theory holds that market movements occur in five waves in a given direction (up or down) followed by a correction of three waves in the opposite direction. According to the theory the wave patterns repeat themselves and can be used for forecasting market movements.