Elliott Wave Theory Indicator
Elliott Wave Theory
Elliott Wave Theory is
a popular method of analysis that applies a technical approach with a
fundamental analysis interpretation. Elliott Wave Theorists also concentrate on
the price action strictly, and agree to the notion that the price is the
beginning and end of all analysis, but they recognize that there exists an
important relationship between liquidity, credit, and economic robustness which
underlies the existing price patterns in the market.
The Wave Theory was
first proposed by Ralph Nelson Elliott, an accountant, in the 1930s. Elliott's
approach was condensed into its definitive form in his 1938 book "Nature's Laws - The Secret of the
Universe" in 1946. Since then, the theory has been regarded both as
pseudo-science, and as an effective method for dealing with the uncertainties
of the market. Academics tend to disregard it in general, while some famous
trading personalities, such as Robert Prechter, and Paul Tudor Jones claim to
have attained success by using it.
The Elliott Wave Theory
is based on the cyclical nature of market events. Most traders are familiar
with the fact that market events, and economical conditions tend to recur in
time with a varying frequency. A growth phase may be exceptionally long, or a
recession (and a bear market may surprised to be exceptionally harsh and deep,
but the nature of trading and economic activity ensures that sooner or later
the existing conditions will revert to the opposite, and the market
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