What Are Elliott Waves?
Elliott Waves are a form of technical analysis used to predict the future direction of stock prices. The theory was developed by Ralph Nelson Elliott in the 1930s and is based on the idea that market movements follow certain patterns or waves. According to Elliott, these waves can be identified and used as an indicator for predicting future price movements.
The basic premise behind Elliott Wave Theory is that markets move in cycles, with each cycle consisting of five distinct phases: impulse wave, corrective wave A, corrective wave B, corrective wave C and final impulse wave. Each phase has its own characteristics which can help traders identify potential entry points into trades or exit points from existing positions. By analyzing past trends using this method, traders can gain insight into where prices may go next and make more informed trading decisions.