零点课堂 | An Introduction to the Elliott Wave Theory（1）

The Elliott Wave refers to a theory (or principle) that investors and traders may adopt in technical analysis. The principle is based on the idea that financial markets tend to follow specific patterns, regardless of the timeframe.

Essentially, the Elliott Wave Theory (EWT) suggests that market movements follow a natural sequence of crowd psychology cycles. Patterns are created according to current market sentiment, which alternates between bearish and bullish.

As a technical analysis tool, the EWT is now used in an attempt to identify market cycles and trends, and it can be applied across a range of financial markets. However, the Elliott Wave is not an indicator or trading technique. Instead, it is a theory that may help to predict market behavior.

The basic Elliott Wave pattern

Typically, the basic Elliott Wave pattern is identifiable by an eight-wave pattern, which contains five Motive Waves (that move in favor of the major trend), and three Corrective Waves (that move in the opposite direction).So, a complete Elliott Wave cycle in a bullish market would look like this:

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