The Elliot Wave Principle

The Elliott Wave Principle is a theory that financial markets move in predictable patterns, called waves, caused by investor psychology. These waves consist of five upward movements (bullish) followed by three downward corrections (bearish). The pattern reflects how collective investor emotions—optimism, euphoria, fear, and caution—drive market trends. By identifying these wave patterns, traders aim to forecast future market movements and make informed decisions. Essentially, it views market prices as recurring cycles of human behavior, providing a framework to understand and anticipate market trends.