Elliott Wave Theory
Understand the fractal nature of market cycles. Identify motive and corrective waves to anticipate the next major directional move.
The Fractal Market
play_circle Elliott Wave Theory: The Definitive Guide
Strategic Briefing: Master the fractal nature of markets with this institutional Elliott Wave masterclass.
Elliott Wave Theory posits that market trends unfold in predictable, fractal wave patterns driven by investor psychology. The core premise is that a primary trend consists of five "motive" waves followed by three "corrective" waves (the 5-3 pattern).
The 5-Wave Motive Sequence
Waves 1, 3, and 5 move in the direction of the primary trend, while Waves 2 and 4 are corrective pullbacks. Wave 3 is typically the longest and most powerful, representing the phase where the broader public recognizes the trend and piles in.
The A-B-C Correction
After the five-wave sequence completes, a three-wave correction (A, B, C) typically follows. Wave A is the initial drop, Wave B is a "dead cat bounce" or relief rally, and Wave C is the final capitulation leg that often establishes a new macro low before the next 5-wave cycle begins. By combining Elliott Wave counts with Fibonacci retracements, traders can identify high-probability reversal zones.
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