Basics of Elliott Wave theory and how much effective it is ?
Elliott Wave Theory is a trading system that was developed by Ralph Nelson Elliott in 1977. It's based on the idea that markets move up and down in waves, rather than in linear fashion.
The theory says that markets go through four different phases: A-B-C-D or A-B-C (or D) - this is called an ABCD pattern.
When we see an ABCD pattern, it means that there has been a big rally from low to high, followed by a correction to low, then another rally back to high again.
This pattern repeats itself over and over again until it reaches its final peak and then starts falling down again towards its final valley.
The theory behind Elliott Wave is that the market moves from extreme price levels in one direction, then reverses and moves back to the opposite extreme price level. This happens over multiple time periods, which are called impulses or corrections. The second impulse will be larger than the first because it includes more time periods between each reversal point; therefore, it has a larger magnitude than the first impulse (which only had three impulses).
The third impulse is smaller than either of its two predecessors because it doesn't include as much time between each reversal point; therefore its magnitude is less than those two impulses combined."
How much effective Elliott Wave Theory is?
Elliott Wave analysis is a powerful tool for investors, traders and speculators. It uses Fibonacci retracement patterns to predict where the price of an asset will move next. The theory behind this method is that prices tend to follow predictable patterns over time and can be used to predict future trends.
The Elliott Wave theory was developed by Ralph Nelson Elliott in 1929. He believed that there were three different types of waves in an economy: corrective, advance and decline waves. These waves can be identified by looking for distinct peaks and troughs separated by valleys (also known as wave boundaries).
Elliott's work has been used since then by many other researchers who have further refined his original findings into more advanced models such as Fibonacci retracements, wave counts and relative strength indicators (RSI).
The Elliott Wave Theory is a system for predicting stock market movements, developed by Ralph Nelson Elliott in the 1930s. It predicts that markets will follow predictable patterns of growth and decline. The theory is based on three waves of five (5) year intervals each, with each wave representing a different type of trend or phase in the market's life cycle.
Each wave is characterized by a specific number of peaks and troughs, which are determined by the Fibonacci ratios (1st, 2nd and 3rd). A normal bull market moves up through three waves before it begins to drop back down again; this pattern is known as a "triple top". A bear market moves down through three waves before it begins to rise again; this pattern is known as a "triple bottom".
The most common way to apply Elliott Waves to stock prices is by using Fibonacci numbers as reference points. For example: if you see an upward trendline connecting two successive peaks or troughs on the chart then this can be considered as confirming an actual increase or decrease in price size relative to nearby highs/lows which