Elliott Waves: A Comprehensive Course on the Wave Principle

1 Elliott waves : A Comprehensive Course ON THE WAVE PRINCIPLEL esson 1: Introduction to the Wave Principle .. 1 Basic Tenets ..1 The Five Wave Pattern ..1 Wave 2: Details of the Complete Cycle .. 2 The Essential Design ..2 Lesson 3: Essential Concepts .. 3 Number of waves at Each Degree ..3 Detailed Analytics ..4 Wave Function ..5 Lesson 4: Motive waves ..5 Truncation ..6 Lesson 5: Diagonal Triangles .. 8 Ending Diagonal ..10 Lesson 6: Zigzags .. 11 Corrective (5-3-5)..11 Lesson 7: Flats (3-3-5).. 13 Lesson 8: 15 Lesson 9: Corrective 16 Double and Triple Threes ..16 Orthodox Tops and Bottoms ..17 Reconciling Function and 10: The guideline of Within Within Corrective 11: Forecasting corrective waves .. 19 Depth of Corrective waves (Bear MarketLimitations) ..19 Behavior Following Fifth Wave 12: Channeling.

2 21 Wave the waves ..22 Channeling Technique .. 13: More "Right Look"..25 Lesson 14: Wave Personality .. 25 Lesson 15: Practical Application .. 28 Learning the 16: Introducing Fibonacci .. 30 Historical And Mathematical Background Of TheWave Principle ..31 The Fibonacci Sequence ..31 The Golden called it "the golden mean."..33 Lesson 17: Fibonacci Geometry .. 33 The Golden Section ..33 The Golden Rectangle ..33 The Golden 18: The Meaning Of 19: Phi And The Stock Mathematics in the Structure of theWave 39 Phi and Additive Growth .. 40 Lesson 20: Introduction To Ratio Analysis ..41 Ratio Analysis .. 41 Retracements .. 42 Lesson 21: Motive and Corrective 42 Lesson 22: Applied Ratio Analysis ..44 Lesson 23: Multiple Wave Wave 46 Lesson 24: A Real-Time Application OfMultiple Wave Relationships.

3 47 The Elliott Wave 48 Lesson 25: Fibonacci Time Sequences ..50 Benner's 51 Lesson 26: Long Term waves ..531. The Millennium Wave from the Dark Ages .. 54 Lesson 27: The Wave Pattern Up To Grand Supercycle from 55 The Supercycle Wave from 55 Lesson 28: Individual 29: Commodities .. 61 Lesson 30: Dow Theory, Cycles, News AndRandom Walk ..62 Cycles .. 63 Random Walk Theory .. 64 Lesson 31: Technical And "Economic Analysis" 66 Exogenous 67 Lesson 32: A Forecast From 1982, Part of 1s and 2s in 33: a forecast from 1982, part II ..68 Double Three Correction Ending in August 1982 .. 69 The Constant Dollar (Inflation-Adjusted) .. 70 October 6, 70 November 29, 1982 .. 70A Picture Is Worth A Thousand Words .. 70 Lesson 34: Nearing the Pinnacle of a GrandSupercycle.

4 70 Epilogue ..7221 Lesson 1: Introduction to the Wave PrincipleIn The Elliott Wave Principle A Critical Appraisal, Hamilton Bolton made this opening statement:As we have advanced through some of the most unpredictable economic climate imaginable, coveringdepression, major war, and postwar reconstruction and boom, I have noted how well Elliott 's Wave Principle has fittedinto the facts of life as they have developed, and have accordingly gained more confidence that this Principle has a goodquotient of basic value."The Wave Principle " is Ralph Nelson Elliott 's discovery that social, or crowd, behavior trends and reverses inrecognizable patterns. using stock market data as his main research tool, Elliott discovered that the ever-changing pathof stock market prices reveals a structural design that in turn reflects a basic harmony found in nature.

5 From thisdiscovery, he developed a rational system of market analysis. Elliott isolated thirteen patterns of movement, or " waves ,"that recur in market price data and are repetitive in form, but are not necessarily repetitive in time or amplitude. Henamed, defined and illustrated the patterns. He then described how these structures link together to form larger versionsof those same patterns, how they in turn link to form identical patterns of the next larger size, and so on. In a nutshell,then, the Wave Principle is a catalog of price patterns and an explanation of where these forms are likely to occur in theoverall path of market development. Elliott 's descriptions constitute a set of empirically derived rules and guidelines forinterpreting market action. Elliott claimed predictive value for The Wave Principle , which now bears the name, "The ElliottWave Principle .

6 " Although it is the best forecasting tool in existence, the Wave Principle is not primarily a forecastingtool; it is a detailed description of how markets behave. Nevertheless, that description does impart an immense amountof knowledge about the market 's position within the behavioral continuum and therefore about its probable ensuing primary value of the Wave Principle is that it provides a context for market analysis. This context provides both abasis for disciplined thinking and a perspective on the market 's general position and outlook. At times, its accuracy inidentifying, and even anticipating, changes in direction is almost unbelievable. Many areas of mass human activity followthe Wave Principle , but the stock market is where it is most popularly applied.

7 Indeed, the stock market considered aloneis far more important than it seems to casual observers. The level of aggregate stock prices is a direct and immediatemeasure of the popular valuation of man's total productive capability. That this valuation has form is a fact of profoundimplications that will ultimately revolutionize the social sciences. That, however, is a discussion for another Elliott 's genius consisted of a wonderfully disciplined mental process, suited to studying charts of the DowJones Industrial Average and its predecessors with such thoroughness and precision that he could construct a networkof principles that covered all market action known to him up to the mid-1940s. At that time, with the Dow in the 100s, Elliott predicted a great bull market for the next several decades that would exceed all expectations at a time when mostinvestors felt it impossible that the Dow could even better its 1929 peak.

8 As we shall see, phenomenal stock marketforecasts, some of pinpoint accuracy years in advance, have accompanied the history of the application of the ElliottWave had theories regarding the origin and meaning of the patterns he discovered, which we will present andexpand upon in Lessons 16-19. Until then, suffice it to say that the patterns described in Lessons 1-15 have stood thetest of one will hear several different interpretations of the market 's Elliott Wave status, especially when cursory,off-the-cuff studies of the averages are made by latter day , most uncertainties can be avoided by keeping charts on both arithmetic and semilogarithmic scale andby taking care to follow the rules and guidelines as laid down in this Course .

9 Welcome to the world of TenetsUnder the Wave Principle , every market decision is both produced by meaningful information and producesmeaningful information. Each transaction, while at once an effect, enters the fabric of the market and, by communicatingtransactional data to investors, joins the chain of causes of others' behavior. This feedback loop is governed by man'ssocial nature, and since he has such a nature, the process generates forms. As the forms are repetitive, they havepredictive the market appears to reflect outside conditions and events, but at other times it is entirely detachedfrom what most people assume are causal conditions. The reason is that the market has a law of its own. It is notpropelled by the linear causality to which one becomes accustomed in the everyday experiences of life.

10 Nor is the marketthe cyclically rhythmic machine that some declare it to be. Nevertheless, its movement reflects a structured progression unfolds in waves . waves are patterns of directional movement. More specifically, a wave is anyone of the patterns that naturally occur under the Wave Principle , as described in Lessons 1-9 of this Five Wave PatternIn markets, progress ultimately takes the form of five waves of a specific structure. Three of these waves , whichare labeled 1, 3 and 5, actually effect the directional movement. They are separated by two countertrend interruptions,which are labeled 2 and 4, as shown in Figure 1-1. The two interruptions are apparently a requisite for overall directionalmovement to Elliott did not specifically state that there is only one overriding form, the "five wave" pattern, but that isundeniably the case.