Elliott Wave Principle

What is Elliott Wave?

According to the Elliott wave theory, a total of eight waves represents an entire movement of a price cycle. Out of eight waves, five refers to as Impulsive waves and three and remaining three referred to as Corrective waves.

At the point when the essential market pattern is bullish, impulsive waves are in the direction of the trend (upwards) whereas corrective waves are opposite to the trend (downwards).

Similarly, once the first market trend is pessimistic, impulsive waves are in the direction of the trend (downwards) whereas corrective waves are opposite to the trend (upwards).
The above pattern formation doesn’t rely on a time frame. You’ll be able to observe Elliott wave patterns in Intraday charts still as monthly charts. However, the likelihood of false waves decreases in higher time frame charts.

Elliot wave in Uptrend
Wave Cycles
Wave cycles - elliott wave
Elliott wave in downtrend



There are three general wave theory rules in Elliott wave theory:

  • Rule 1: Wave 2 cannot retrace more than 100% of Wave 1, means wave 2 cannot go below the start point of wave 1.
  • Rule 2: Wave three will never be the shortest of the 3 impulse waves. (Generally, it is the biggest wave and most furious).
  • Rule 3: Wave four can never overlap Wave one.

To get insights about this wonderful theory, I recommend you read a classic book on Elliott waves.Which is shown below.

Elliott Wave Principle: Key to Market Behavior

Developed by Ralph Nelson Elliott in the 1930s and ’40s, the Elliott Wave Principle is a powerful analytical tool for Predicting Share market behavior. The basic idea behind the Principle is that Share market prices rise and fall in discernible patterns and that those patterns can be linked together in form of waves. Since, its inception, this classic guide to the Elliott Wave Principle has acquired a cult status among technical analysts, worldwide. And with each new edition, the authors have refined and enhanced the principle, while retaining all the predictions from past editions. This book clearly describes Elliott Wave theory and applications and includes the authors’ latest forecasts, including their prediction of the great bear market to follow the past decade’s bull market.
You can Buy this Book from below link:

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