Elliott Wave Analysis: Explained

Elliott Wave Analysis (or simply "Elliott Waves") is a market analysis method based on the assumption that asset prices move in certain cyclic patterns that can be identified and used to predict future price movements.According to Elliott's theory, prices move in five wave cycles which are called "impulse" waves (1, 2, 3, 4, and 5) and three "corrective" waves (A, B, and C). These waves form a larger cycle that can be analyzed to predict future price movements.

When using the Elliott Method, traders and investors look for these wave patterns on charts of price movements and use them to identify entry and exit points as well as support and resistance levels.