SIDEBAR: THE ELLIOTT WAVE by Technical Analysis, Inc.
ARTICLE SYNOPSIS ...THE ELLIOTT WAVE by Technical Analysis, Inc.
The Elliott wave principle is a method for classifying and forecasting market movement. The basic tenet
is that markets move in a five-wave pattern in the direction of the trend. Once the five waves have been
completed, the market will move counter to the trend in a three-wave pattern. For example, in Figure 1
the trend is up and there are five waves labeled waves 1, 2, 3, 4 and 5. Waves 1, 3 and 5 are called
impulse waves. Waves 2 and 4 are corrective waves, moving counter to the preceding waves. Once a
five-wave movement is complete, the market w...