Investing and Money Glossary, terms and definitions.

Elliott Wave Theory

Inspired by forces of nature, Ralph Nelson Elliot observed that the movements in the stock market could be predicted by identifying a repetitive pattern of waves using price charts. The underlying premise of the Elliott Wave Theory is that of building up and tearing down. He concluded that there are five price-change waves in the direction of the main trend followed by three corrective waves, often referred to as a ""5-3"" move.