Applying the Elliott Wave Principle

The Elliott Wave Principle is Ralph Nelson Elliott’s discovery that investor behavior, or crowd psychology, is not random or unpredictable. On the contrary, it trends and reverses in recognizable, repeating patterns on all degrees of trend and in all liquid markets, from stocks to commodities to cryptocurrencies. Using stock market data as his main research tool, Elliott isolated 13 patterns of movement, or “waves,” that recur in market price data. He named, defined and illustrated those patterns. He then described how they link together to form larger versions of themselves, and how those in turn link to form identical patterns of the next larger size — all the way from intraday charts to wave patterns that span centuries of market data.