Elliott Wave Principle
Elliott Wave Theory glossary · Core Axioms & Motive Wave Rules
Definition
A market analysis framework, first described by Ralph Nelson Elliott in the 1930s, holding that prices move in recognisable, repeating fractal patterns driven by mass psychology — five-wave impulses in the direction of the larger trend and three-wave corrections against it. Patterns nest across degrees from Grand Supercycle down to Sub-Minuette, governed by three inviolable rules and a body of probabilistic guidelines.
Elliott Wave Principle in plain English
This is the big idea behind everything here: a man named Ralph Nelson Elliott noticed in the 1930s that markets don't move randomly but in repeating patterns, because prices are really just crowds of people swinging between optimism and fear. The core rhythm is five waves pushing in the direction of the main trend, then three waves pulling back — and this same shape repeats at every zoom level, from decades-long 'Grand Supercycle' waves down to tiny 'Sub-Minuette' ones, like how a coastline looks equally jagged from a plane or up close (that's called being 'fractal'). Three rules can never be broken, while a bunch of softer 'guidelines' just tell you what's likely, not certain. In short: crowd emotion leaves a fingerprint on the chart, and it always looks familiar.
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