Ralph Nelson Elliott discovered the Wave Principle in the 1930s.
Over the decades, his discovery was kept alive by a handful of
individuals. A few of those, such as Bolton, Prechter and Frost,
educated investors on how to use pattern analysis in financial
markets.
To help out Elliott Wave International’s readers in learning
the basics of the method, we put together a free 10-lesson online
tutorial. Here’s an excerpt. To get it in full, look for details
below.
EWI’s Basic Elliott Wave Tutorial
Lesson 1, excerpt
At that time [of his discovery], with the Dow in the 100s, R.
N. Elliott predicted a great bull market for the next several
decades that would exceed all expectations at a time when most
investors felt it impossible that the Dow could even better its
1929 peak. As we shall see, phenomenal stock market forecasts,
some of pinpoint accuracy years in advance, have accompanied
the history of the application of the Elliott Wave approach.
Under the Wave Principle, every market decision is both produced
by meaningful information and produces meaningful information.
Each transaction, while at once an effect, enters the fabric
of the market and, by communicating transactional data to investors,
joins the chain of causes of others’ behavior. This feedback
loop is governed by man’s social nature, and since he has such
a nature, the process generates forms. As the forms are repetitive,
they have predictive value.
The market…is not propelled by the linear causality to which
one becomes accustomed in the everyday experiences of life. Nor
is the market the cyclically rhythmic machine that some declare
it to be. Nevertheless, its movement reflects a structured formal
progression. In markets, progress ultimately takes the form of
five waves of a specific structure.
Three of these waves, which are labeled 1, 3 and 5, actually
effect the directional movement. They are separated by two countertrend
interruptions, which are labeled 2 and 4, as shown in Figure
1-1. The two interruptions are apparently a requisite for overall
directional movement to occur.
At any time, the market may be identified as being somewhere
in the basic five wave pattern at the largest degree of trend.
Read the rest of this 10-lesson Tutorial and see multiple charts
now, free! All you need is to create
a free Club EWI profile.
Basic Elliott Wave Tutorial online now, free! Here’s what
you’ll learn:
- What the basic Elliott wave progression looks like
- Difference between impulsive and corrective waves
- How to estimate the length of waves
- How Fibonacci numbers fit into wave analysis
- Practical application tips for the method
- More
This
article, Learn Basics of Elliott Wave Analysis, was syndicated by Elliott Wave International. EWI
is the world’s largest market forecasting firm. Its staff
of full-time analysts lead by Chartered Market Technician Robert
Prechter provides 24-hour-a-day market analysis to institutional
and private investors around the world.
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