The elliott wave theory is predominantly at work in the financial markets. The ever changing psychology of the investors is usually seen as patterns in the form of price movements. The Elliott Wave theory, is in effect a principle that was drafted by Ralph Nelson Elliott. The Elliott Wave theory is a princple that details how certain groups of people tend to behave.
July 28, 2011 would have been Ralph N. Elliott’s 140th birthday, so it is only fitting to post an excerpt from his essay, “The Basis of the Wave Principle.” There’s nothing like reading for yourself what the discoverer of the Wave Principle, later to be known as Eliott Wave principle wrote about how the principle works. The following passage is an excerpt from the book, R.N. Elliott’s Masterworks. This is the definitive collection that Robert Prechter collected and published in 1994.