Ralph Nelson Elliott discovered wave patterns in stock prices during his recovery from illness in the 1930s. He published ‘The Wave Principle’ in 1938.
Description
Ralph Nelson Elliott (1871–1948) was an American accountant who, while recovering from a serious illness in the early 1930s, studied 75 years of U.S. stock market data and identified a recurring pattern of 5 waves up and 3 waves down. He named this the Wave Principle and published his findings in a monograph in 1938. His work was later popularized by Hamilton Bolton and Robert Prechter.
Key Points
- Elliott discovered the Wave Principle while studying stock market data during his illness recovery (1932–1935)
- Published ‘The Wave Principle’ as a monograph in 1938
- Key insight: stock prices move in a repeating pattern of 5 waves in the direction of the trend and 3 waves in correction
- Elliott identified the fractal (self-similar) nature of the patterns — the same structure appears at all degrees
- Robert Prechter and A.J. Frost expanded and popularized Elliott’s work in ‘Elliott Wave Principle’ (1978)
