Elliot wave: The theory is developed by Ralph Nelson Elliot in 1930. It is a technical tool used by traders to analyse the market trend, investor’s psychology and stock prices. Elliot observes the market deeply and understands the movement of the stock prices by repetitive patterns of market trends. His theory is based on Dow Theory. This theory consist 8 waves which shows bullish and bearish both market trend. It works on 5:3 patterns which mean 5 waves up and 3 waves down. Impulsive wave show a trend in the main direction. In Elliot wave 1, 3, and 5 are impulsive wave and 2, 4 are corrective waves. Corrective waves are those which retrace the upward movement of wave. The total five waves show the bullish market trend and 3 waves show bearish market trend. A diagram which shows Elliot wave is given below: · In the above diagram the 1 st wave starts from base and then move upward to show rising trend of market. This wave is imp...
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