Elliott Wave International Analysts Team
Elliott Wave International
Let it be stated upfront that there is no perfect way to analyze and forecast financial markets. No crystal balls.
Yet, let's be just as quick to add that in Elliott Wave International's review of market analysis methods, none approach the utility of the Elliott wave model.
The reason for the Elliott wave model's usefulness is easily explained: Elliott waves are reflections of the repetitive patterns of investor psychology, which is the real driver of prices, not news or events.
And, what could be more useful to an investor than a method which helps to identify a financial market's trend -- especially before it gets underway? Well, mastering the Elliott wave model helps you to do just that.
The Wall Street classic book, Elliott Wave Principle: Key to Market Behavior by Frost & Prechter, says:
...action in the same direction as the one larger trend develops in five waves.
Here are illustrations:
Let's now learn how the Elliott wave model identifies countertrend moves within the main trend by returning to Elliiott Wave Principle and additional illustrations:
... reaction against the one larger trend develops in three waves.
Lastly, let's learn how Elliott wave analysis signals the resumption of the main trend.
Elliott Wave International analyst Jeffrey Kennedy says:
A complete Elliott wave cycle consists of eight waves. Upon its completion, a similar cycle ensues....
Again, here are illustrations of the point:
The reason that a market's basic form is five waves followed by three waves is that this is the most efficient method of achieving both fluctuation and progress in linear movement.
Think of it as a variation of nature's "two steps forward, one step back" model of achieving progress.
After all, humans are a part of the natural world, so it only follows that the financial markets, a product of human interaction, would carry the same imprint.
As you might imagine, there are many more details in applying the Elliott Wave Principle to financial markets, and it took an entire book to lay them all out.
The purpose of this article is to simply show you that the price patterns of financial markets unfold according to a repetitive, predictable structure. Familiarity with that structure can help you determine what's next.
Jump on once-in-a-lifetime opportunities and avoid dangerous pitfalls that no one else sees coming. We can help you prepare for opportunities and side step risks that will surprise most investors. You can get deeper insights in Elliott Wave International's new free report: 5 "Tells" that the Markets Are About to Reverse. The insights that you'll gain are especially applicable to the price patterns of key financial markets, including the stock market, now.
Get more financial insights like these -- 100% free.
Elliott Wave International does not provide investment advice. All rights reserved.
Editors’ Picks
EUR/USD faces next resistance near 1.1930
EUR/USD has surrendered its earlier intraday advance on Thursday and is now hovering uncomfortably around the 1.1860 region amid modest gains in the US Dolla. Moving forward, markets are exoected to closely follow Friday’s release of US CPI data.
GBP/USD change course, nears 1.3600
GBP/USD gives away its daily gains and recedes toward the low-1.3600s on Thursday. Indeed, Cable now struggles to regain some upside traction on the back of the sudden bout of buying interest in the Greenback. In the meantime, investors continue to assess a string of underwhelming UK data releases released earlier in the day.
USD/JPY consolidates around 153.00 favoured by lower Fed easing bets
USD/JPY steadies around 153.00 after hitting two-week lows at 152.25. A strong US Nonfarm Payrolls report provided some support for the US Dollar on Wednesday. The Yen remains on track for a 2.6% weekly rally, boosted by Takaichi's victory at Sunday's elections.
Editors’ Picks
AUD/USD: Some profit-taking should not be ruled out
AUD/USD has quickly faded Wednesday’s strong advance despite climbing to new multi-year highs around 0.7150 earlier on Thursday. The pair’s decline comes amid a marginal uptick in the US Dollar, while investors gear up for US CPI data and relevant Chinese releases on Friday.
EUR/USD faces next resistance near 1.1930
EUR/USD has surrendered its earlier intraday advance on Thursday and is now hovering uncomfortably around the 1.1860 region amid modest gains in the US Dolla. Moving forward, markets are exoected to closely follow Friday’s release of US CPI data.
Gold plunges on sudden US Dollar demand
Gold drops markedly on Thursday, challenging the $4,900 mark per troy ounce following a firm bounce in the US Dollar and amid a steep sell-off on Wall Street, with losses led by the tech and housing sectors.
Ripple collaborates with Aviva Investors to tokenize funds as XRP interest declines
Ripple (XRP) exhibits subtle recovery signs, trading slightly above $1.40 at the time of writing on Thursday, as crypto prices broadly edge higher. Despite the metered uptick, risk-off sentiment remains a concern across the crypto market, as retail and institutional interest dwindle.
A tale of two labour markets: Headline strength masks underlying weakness
Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.
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