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ELLIOT WAVE

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ELLIOT WAVE Elliott Wave theory is developed by Ralph Nelson Elliott (1871-1948) and is successfully being used by market participants to analyze stock market to forecast market trends. Elliot Wave theory is based on the hypothesis that stock prices move between optimism and pessimism of all market participants’ psychology and wide swings in the participants’ psychology makes stock prices move in a certain patterns/trends. Fundamental Concept     Elliott Wave theory suggests that stock prices move in clear trends. These trends can be classified in two parts i.e. A. Dominant trend (Five wave pattern) B. Corrective trend (Three wave pattern) A. Dominant Trend (Five wave pattern) Basically Dominant Trend consists of five waves. These five waves can be in either direction, up or down. When five waves directions is up then advancing waves are known as impulsive waves and declining waves are known as corrective waves. Similarly when five waves directions is down th