Elliott Wave Theory

The Elliot Wave Theory is 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.

Elliott Wave Theory 

The Elliot Wave Theory is 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.


Elliott Wave Theory Overview

The Elliott Wave Theory postulates that crowd psychology moves between optimism and pessimism in predictable cycles. These mood swings create patterns in the price movements of markets at every degree of trend or time scale.

Illustration of Elliott Wave Theory from R.N. Elliott's essay, "The Basis of the Wave Principle," October 1940

Illustration of Elliott Wave Theory from R.N. Elliott's essay, "The Basis of the Wave Principle," October 1940

Application of Elliott Wave Theory

Elliott Wave Theory is among the methods included on the exam that analysts must pass to earn the Chartered Market Technician (CMT) designation, the professional accreditation developed by the Market Technicians Association (MTA).

Robert Prechter is the most famous practitioner of Elliott Wave Theory to date. His prominence as a forecaster during the bull market of the 1980s brought significant exposure to Elliott's work.

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