Elliott Wave Theory Basics

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About Elliott Wave Theory

In the 1930s, Ralph Nelson Elliott discovered that stock market prices trend and reverse in recognizable patterns. The patterns he discerned are repetitive in form but not necessarily in time or amplitude. Elliott isolated five such patterns, or “waves,” that recur in market price data. He named, defined and illustrated these patterns and their variations. He then described how they link together to form the same patterns of the next larger size, and so on, producing a structured progression. He called this phenomenon The Wave Principle.

  – Excerpt from Elliott Wave Principle by Frost and Prechter, pg. 19

The Wave Principle is governed by man’s social nature, and since he has such nature, its expression generates forms. As the forms are repetitive, they have predictive value.

Sometimes the market appears to reflect outside conditions and events, but at other times it is entirely detached from what most people assume are causal conditions. The reason is that the market has a law of its own. It is not propelled by the external causality to which one becomes accustomed in the everyday experiences of life. The path of prices is not a product of news. Nor is the market the cyclically rhythmic machine that some declare it to be. Its movement reflects a repetition of forms that is independent of both presumed causal events and of periodicity.

   – Excerpt from Elliott Wave Principle by Frost and Prechter, pg. 21


Elliott Wave Theory Basic Rules and Guidelines

The PDF provided at the following link is a very well written set of Elliott Wave Theory rules. Use it to follow along with the cryptocurrency wave counts.


If price action violates one of these rules, then the count as labelled gets invalidated and adjustments must be made.

Elliott Wave Measurement Guidelines

Another PDF provides guidelines for wave measurement techniques following typical Fibonacci ratios.



Well Written Elliott Wave Beginners Guide