Elliott Waves Trading Principle

Predict price movements using this principle →

Hey there!

Today we’ll discuss a technical analysis concept by Ralph Nelson Elliott, where one can predict price movements using ‘waves’.

Elliott observed that stock market prices trend and reverse in recognizable patterns, which are repetitive in form, but not in time or amplitude. These trends are called ‘waves’.

Waves are a pattern of directional movement. A collection of waves (also called a phase) consists of both directional and pullback waves.

One complete cycle of the structured progression of waves is made up of 2 phases:

  • Motive Phase (1,2,3,4,5): Made up of 5 waves, motive waves move in the same direction as the larger trend.

  • Corrective Phase (A,B,C): Made up of 3 waves, corrective waves move in the opposite direction of the larger trend.

The structural framework provided by this principle reflects the general principle of any market cycle, helping one anticipate future movements.

Note that this principle won’t be applicable to penny stocks or small caps, rather, it is suitable for major indices like the Nifty, Dow Jones, etc.

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 Learn how to integrate the Elliott Waves principle into your trading system

Explore the principles of wave analysis, Fibonacci levels, and pattern recognition to improve your trading system in Piyush Cahudhary’s Elliott Wave Trading Course.

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None of the above stock ideas are intended as recommendations. Please consult a registered advisor before buying/selling.

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