Elliott Wave Theory is a method of technical analysis that traders use to analyze and quantify price patterns in financial markets by looking at cycles. The theory believes that changes in investor sentiment and their psychology creates impulse waves and corrective waves inside the larger trends in market price action. The theory attempts to forecast market trends by identifying the most extremes in trader’s collective psychology that create the highs and lows in price action. Ralph Nelson Elliott developed the theory of the underlying principles and created the analytical tools back in the 1930s. He believed that ... (full story)