Who is the father of Elliott wave theory?
1 Answer
The father of the Elliott Wave Theory is **Ralph Nelson Elliott** (born 1871–1948). Elliott was an American accountant who, in the 1930s, developed this theory to explain and predict price movements in the financial markets.
Elliott's theory suggests that markets move in repetitive cycles, which he believed were the result of the collective psychology of investors. He identified patterns in stock prices that follow a specific sequence of waves. The basic structure of these waves includes:
1. **Five-wave pattern**: This forms a trend in the direction of the larger market movement.
2. **Three-wave correction**: This follows the five-wave pattern, in which the market retraces part of the previous advance.
These waves correspond to shifts in investor sentiment, driven by optimism, pessimism, and various market psychology factors. The theory, while initially limited in recognition, later gained popularity and is now widely used by traders and analysts in technical analysis.
Elliott's theory suggests that markets move in repetitive cycles, which he believed were the result of the collective psychology of investors. He identified patterns in stock prices that follow a specific sequence of waves. The basic structure of these waves includes:
1. **Five-wave pattern**: This forms a trend in the direction of the larger market movement.
2. **Three-wave correction**: This follows the five-wave pattern, in which the market retraces part of the previous advance.
These waves correspond to shifts in investor sentiment, driven by optimism, pessimism, and various market psychology factors. The theory, while initially limited in recognition, later gained popularity and is now widely used by traders and analysts in technical analysis.