Elliott Wave Theory, developed by Ralph Nelson Elliott, posits that financial markets move in predictable cycles, driven by investor psychology. These cycles are composed of five waves in the direction of the trend and three corrective waves.
The three main rules in Elliott Wave Theory are:
Wave 2 cannot retrace more than 100% of Wave 1.
Wave 3 cannot be the shortest among Waves 1, 3, and 5.
Wave 4 cannot overlap the price territory of Wave 1.
These rules help in accurately identifying and confirming the wave patterns in financial markets.
More information about this is expected in future articles
Like, share and follow