Elliott Wave Glossary

The concept of wave hierarchy in Elliott Wave Theory — classifying waves by their relative size. From smallest to largest: Sub-Minuette, Minuette, Minute, Minor, Intermediate, Primary, Cycle, Supercyc

Economic cycles (expansion, peak, contraction, trough) correspond to Elliott Wave degrees, but the correspondence is approximate — wave form is more reliable than timing.

Ralph Nelson Elliott discovered wave patterns in stock prices during his recovery from illness in the 1930s. He published 'The Wave Principle' in 1938.

The philosophical foundation: human social behavior follows rhythmic patterns. Markets are a reflection of collective human psychology, not random walks.

Elliott waves exhibit fractal (self-similar) structure: the same 5-3 pattern appears at every degree of trend. Each wave contains smaller waves of the same form.

The fundamental pattern of Elliott Wave Theory: 5 waves in the direction of the main trend (impulse) followed by 3 waves in correction. Each sub-wave also follows this pattern.

An impulse wave is a 5-wave pattern that moves in the direction of the larger trend. It must satisfy three absolute rules and tends to follow several guidelines.

The three absolute rules that every impulse wave must satisfy. Any count that violates these rules is invalid: (1) Wave 2 does not retrace beyond wave 1 start; (2) Wave 3 is never the shortest; (3) Wa