Elliot Wave Theory

Elliott Wave Theory is a method used to analyze financial markets by identifying repetitive patterns in price movements. It suggests that market prices move in a series of five waves in the direction of the main trend, followed by three corrective waves against it. These patterns reflect collective investor psychology—optimism, fear, and other emotions—that drive buying and selling behaviors. By recognizing these wave patterns, traders aim to predict future market trends and turning points, making it a tool for understanding market cycles and timing entries and exits more effectively.