The Elliott Wave Principle

The Elliott Wave Principle is a method used to analyze financial markets by identifying recurring patterns in prices, called waves. It suggests that market movements follow a repetitive cycle of five upward (bullish) waves, followed by three downward (corrective) waves, reflecting investor psychology shifts between optimism and pessimism. These waves help traders predict future price directions by recognizing where the market currently stands within these patterns. While not foolproof, the principle offers a structured way to understand market trends, emphasizing that market behavior is influenced by collective human emotions and social factors.