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Finance Dictionary and Glossary of Investment Terms
Elliott Wave Theory
A technical analysis technique published by Ralph Elliott, which claims that stock markets follow a pattern of five waves up and three waves down (or sometimes, five up and three down in a bull market, and three up and five down in a bear market).
Theory 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.
Inspired by forces of nature, Ralph Nelson Elliot observed that the movements in the stock market could be predicted by identifying a repetitive pattern of waves using price charts. The underlying premise of the Elliott Wave Theory is that of building up and tearing down. He concluded that there are five price-change waves in the direction of the main trend followed by three corrective waves, often referred to as a ""5-3"" move.
echnical market timing strategy that predicts price movements on the basis of historical price wave patterns and their underlying psychological motives. Robert Prechter is a famous Elliott Wave theorist.