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The Elliott Waves Theory, or Elliott Wave Principle (EWP), was first put forward by a qualified accountant named Ralph N. Elliott in the early 20th century. It is not a straight forward pattern that can be read with absolute clarity in real-time. What it does provide is good risk/reward opportunities to enter in the direction of the trend.

Elliott's wave pattern alternates between a five wave of progress, called a motive phase, and a three wave of counter-trend movement called a corrective phase. The five wave of the motive phase are labeled with numbers 1, 2, 3, 4, and 5, while the three waves of the corrective phase are labeled with letters a, b, and c. Motive waves always move with