Market Nature And The Elliott Wave Theory

The human nature by definition is the general psychological characteristics, feelings, and behavioral traits of humankind. As such, everyone shares this nature. Similarly, the market also has a market nature and since it is created by humans, we can try to understand what the market nature is. Today’s market is the result of either manual trades by individual traders or automated computer’s algorithm which itself is also created by humans. The computer follows the same technique in each time frame and repeats the same condition over and over again.

Ralph Nelson Elliott, a professional accountant, discovered the underlying social principles and developed the analytical tools in the 1930s. He proposed that market prices unfold in specific patterns, which practitioners today call “Elliott waves“, or simply “waves”. Elliott published his theory of market behavior in the book The Wave Principle in 1938, summarized it in a series of articles in Financial World magazine in 1939, and covered it most comprehensively in his final major work, Nature’s Laws: The Secret of the Universe in 1946. Elliott stated that “because man is subject to a rhythmical procedure, calculations having to do with his activities can be projected far into the future with a justification and certainty heretofore unattainable.” We can relate the last paragraph to the Human Nature and as a result, the Market Nature is the Market created by Humans.

We believe the Market follows their own Natural code which we call sequences. Mr. Elliott calls it the Pattern or the Fractal nature of the Market. The Market advances in 2 sequences, the Impulse which comes in sequences of 5-9-13 or the corrective sequences which come in 3-7-11. What we have developed at Elliotwave-Forecast (EWF) is a new understanding of The Elliott wave Theory which states that trend can advance in 5 waves or 3 waves and that at the end, every 5 waves becomes a 3 waves.