Crowd Psychology
Elliott Wave Theory glossary · Elliott Wave Theory
Definition
Collective emotional state of market participants (fear, greed, complacency) producing the recurring wave patterns Elliott identified.
Crowd Psychology in plain English
Elliott's whole theory rests on the idea that prices are really a picture of how the crowd of buyers and sellers is FEELING — swinging between greed when everyone piles in, fear when everyone panics out, and lazy complacency in between. Because human emotion tends to repeat in the same rhythms, these mood swings stamp the same recognizable shapes onto price charts over and over. Think of a stadium crowd doing 'the wave': no one's in charge, yet the collective mood produces a pattern you can see and predict.
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