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Transcript of Elliottwave en
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Background
Ralph Nelson Elliott) (1871 - 1948) studied the wave phenomena of the US stock market in 1934
Published the “Wave Principle “ in 1938
Published the “Nature Law” in 1942
In 1970s, Robert Prechter, Jr. made Elliott Wave Theory popular in the investing communities
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Theory Outline
Market fluctuations due to: Impulse Wave
Corrective Wave
Impulse wave follows the trend
composes of 5 sub-waves
Corrective wave moves against the trend
Composes of 3 sub-waves
Waves within waves
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1
2
3
4
(1) 5
(2) c
a
b
1
2
3
4
(3) 5
a
b
(4) c
1
2
3
4
(5) 5
1
2
3
4
(a) 5
a
b
(b) c
1
2
3
(c) 5
4
Waves within
Waves
By counting waves in the long term to short term charts, forecasting can be made
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Time / Price Structure of
Financial Markets
Fluctuations according to:
the Fibonacci Number Series
Fractal Structure
Non-linearity
Asymmetry
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Wave Counting Principle
2nd wave should not exceed the beginning
of 1st wave
3rd wave should not be the shortest
among 1st, 3rd and 5th wave
No overlapping between 4th and 2nd wave
(with exception in diagonal triangle)
Rule of alteration – 2nd and 4th waves take
different wave forms
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1
2
3
4
5
1
2
CorrectWrong
End of 2nd wave should not exceed
the beginning of 1st wave
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1
2
3
4
5
Correct
Wrong
1
2
(i)
(ii)
(iii)
3rd wave
should not be
the shortest
among 1st, 3rd
and 5th wave
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1
2
3
4
5
Correct
Wrong
(i)
(ii)
(iii)
1
2
4th wave
should not
overlap with
the 2nd
wave
(except for
diagonal
triangle)
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1
2
3
4
5
Correct
Correct
1
2
3
4
5
Rule of
Alteration –
2nd and 4th
wave take
different
forms
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3 Wave Forms in Impulse Wave (1)
Extension –
One of the 1st , 3rd and 5th wave will extend
conspicuously
3rd wave would not be the shortest among
1st, 3rd and 5th wave
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1
2
3
4
5
1
2
3
4
5
1
2
3
4
5
1st wave
extension3rd wave
extension
5th wave
extension
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3 Wave Forms in Impulse Wave (2)
Diagonal triangle – Wave structure in upward or downward diagonal
triangle
In a form of contracting or expanding triangle
The sub-waves in the diagonal triangle take the structure of 3-3-3-3-3
If diagonal triangle appears at the 1st wave, it will take the structure of 5-3-5-3-5
The 2nd and the 4th sub-wave will overlap
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1
2
3
4
5
Contracting
diagonal
Triangular
5th wave
1
2
3
4
5
Expanding
diagonal
triangular
5th wave
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1
2
3
4
5Contracting
diagonal
triangular
1st wave
Expanding
diagonal
triangular
1st wave1
2
3
4
5
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3 Wave Forms in Impulse Wave (3)
5th wave extension –
5th wave failed to exceed the 3rd wave end
5th wave takes a structure of 5-3-5-3-5
failure to have the momentum to breath into new high / low before reversal
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1
2
3
4
5
Upward 5th wave
failure
Downward 5th wave
failure
1
2
3
4
5
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Corrective Wave Structure
4 simple structures in corrective wave
Zig-Zag
Flat
Irregular
Horizontal Triangle
2 complex structures in corrective wave
Double Three
Triple Three
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Zig Zag (5-3-5)
a
b
c
a (i)
(i)
(ii)
(iii)
(iv) a
b
b c
(i)
(ii)
(iii)
(iv)
c (v)
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Flat (3-3-5)
a
b
c
a c
a
b a
b
b c
(i)
(ii)
(iii)
(iv)
c (v)
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Irregular (3-3-5)
a
b
c
a c
a
b a
b
b c
(i)
(ii)
(iii)
(iv)
c (v)
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acrotec.comHorizontal Triangle (3-3-3-3-3)
a
b
c a
b
c
d
e
d
e
a
b
c
a
b
c
d
e
d
e
Contracting
horizontal
triangle
Expanding
horizontal
triangle
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acrotec.comDouble-three
a
b
x c
a (i)
(i)
(ii)
(iii)
(iv) a
b
b c
(i)
(ii)
(iii)
(iv)
c (v)
a c
a
b a
b
b c
(i)
(ii)
(iii)
(iv)
c (v)
a
b
c
x
a
b
c
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Triple-three
a
b
x c
a (i)
(i)
(ii)
(iii)
(iv) a
b
b c
(i)
(ii)
(iii)
(iv)
c (v)
a c
a
b a
b
b c
(i)
(ii)
(iii)
(iv)
c (v)
a
b
c
x
a
b
c
bx
a c
a c
a
b
a
b
b c
(i)
(ii)
(iii)
(iv)
c (v)
a
b
x c
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1
2
Elliott Channel (1)
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1
2
Elliott Channel (2)
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1
2
3
4
Elliott Channel (3)
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1
2
3
4
5Elliott Channel (4)
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1
2
3
4
(1) 5
(2) c
a
b
1
2
3?
Elliott Channel (5)
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1
2
3
4
(1) 5
(2) c
a
b
1
2
3
4
(3) 5
Elliott Channel (6)
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1
2
3
4
(1) 5
(2) c
a
b
1
2
3
4
(3) 5
a
b
(4) c
(5) 5?
Elliott Channel (7)
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1
2
3
4
(1) 5
(2) c
a
b
1
2
3
4
(3) 5
a
b
(4) c
1
2
3
4
(5) 5
Elliott Channel (8)
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1
2
3
4
(1) 5
(2) c
a
b
1
2
3
4
(3) 5
a
b
(4) c
1
2
3
4
(5) 5
1
2
3
4
(a) 5
Elliott Channel (9)
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1
2
3
4
(1) 5
(2) c
a
b
1
2
3
4
(3) 5
a
b
(4) c
1
2
3
4
(5) 5
1
2
3
4
(a) 5
a
b
(b) cElliott Channel (10)
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1
2
3
4
(1) 5
(2) c
a
b
1
2
3
4
(3) 5
a
b
(4) c
1
2
3
4
(5) 5
1
2
3
4
(a) 5
a
b
(b) c
1
2
3
(c) 5
4
Elliott Channel (11)
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acrotec.comItem Details
Book Name Elliott Wave Principle: Key to Market
Behavior
Author Robert Prechter and A.J. Frost
Contents The basic tenets of wave theory
The rules and guidelines of wave analysis
The scientific background of the Wave
Principle and Long term waves
Item Details
Book Name R. N. Elliott's Masterworks: The Definitive
Collection
Editor Robert Prechter, Jr.
Contents "The Wave Principle" (1938)
The Financial World articles (1939)
Nature's Law -- The Secret of the Universe
(1946)
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