11/15/2022 0 Comments Elliott impulsive wave![]() ![]() ![]() Since the movement of the market prices is the product of human activity and therefore subject to natural rules, it tends to express recurring sequences of bullish and bearish waves, which can be traced back to a general model.Įlliott Wave Theory relates these wave patterns to the mass psychology of investors. The market must be considered a phenomenon created and fed by men and therefore permeated by irrational attitudes that characterise people’s daily lives. If these were missing, it would not be possible to achieve any balance and the prices would lead to convulsive disorganised fluctuations. ![]() The Elliott Wave principle is based on the assumption that each market represents a phenomenon fuelled by economic flows, induced by psychological currents and governed by natural laws. Elliott placed great importance on the systematic observation of nature in order to grasp its most significant cycles. Overall, Elliott’s approach aimed to find a synthesis of the laws that govern natural phenomena, of which the stock market is simply an aspect. In a similar way to Dow theory, the Elliott Wave theory distinguishes price movements in terms of waves. In particular, he added a series of forecasting elements that no longer merely identified market trends (upward or downward), but also calculated achievable price levels. He not only confirmed Dow’s studies, but also introduced a series of more precise definitions for each market phase. Ralph Nelson Elliott is still considered by many the only worth successor to Charles Dow in analysing market movements. However, in the early 1900s, theorists were already trying to link the markets’ behaviour with nature, an innovative concept known as “biomimicry” and the basis for the Elliott Wave theory. To this day, price fluctuations in the financial markets still pose somewhat of a conundrum for the scientific community. The Elliott Wave theory gained popularity in 1935 when Elliott made a prediction of a stock market bottom. ![]()
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