We believe that any freely traded markets like equities, forex, commodities move in the form of repeatable wave patterns that exhibit fractal nature at various degrees.
Ashish Kyal
The Elliott Wave principle provides an unparalleled tool for predicting where the different world markets are headed.
The wave principle methodology incorporates the patterns of life and time, cultural and social behavior. It has stood the test of time and has proven its validity in the last century.
In the 1930s, RN Elliott discovered that the stock market moves in recurring patterns that he called waves.
He formulated the Wave Principle based on these wave patterns called Elliott waves. Humans behave in a manner when given a stimulus, in a similar and probabilistically predictable fashion.
This behavior of acting in similar ways makes us no different than the other creations of nature. Freely traded markets are the only sources that reflect the collective behavior of humans and the current social mood.
Highly liquid markets cancel out the random events and what is left is the social mood of the mass and that indicates what we can expect in the future.
We believe that any freely traded markets like equities, forex, commodities move in the form of repeatable wave patterns that exhibit fractal nature at various degrees.
This behavior was first observed by Ralph Nelson Elliott in 1930s. This study of waves is now famously known as Elliott Wave.
Following are the basic rules that an impulse pattern within Elliott wave should follow:
> Wave 2 will not retrace more than 100 percent of wave 1
> Wave 3 cannot be the shortest among the impulse waves and it is very commonly the longest.
> Wave 4 cannot enter into the territory of wave 1
The above rules can be observed on the below chart of Nifty:
So, what is next from here and which type of correction are we seeing? Stay tuned!
(The author is Founder & CEO, Waves Strategy Advisors)
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