# acrotec.

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acrotec.com

Background

Ralph Nelson Elliott) (1871 - 1948) studied the wave phenomena of the US stock market in 1934 Published the “Wave Principle “ in 1938 Published the “Nature Law” in 1942 In 1970s, Robert Prechter, Jr. made Elliott Wave Theory popular in the investing communities

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Theory Outline

**Market fluctuations due to:
**

Impulse Wave Corrective Wave

Impulse wave

follows the trend composes of 5 sub-waves

Corrective wave

moves against the trend Composes of 3 sub-waves

**Waves within waves
**

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forecasting can be made
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.acrotec.com Waves within Waves (3) 5
b 3 a 2 (a) 5 4 (5) 5
3 1 4 1
2
4 a
(b) c
3
b 1
2 4 3
1
(1) 5
(4) c
3 1
4
b
2 (c) 5
a
(2) c
2
By counting waves in the long term to short term charts.

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Time / Price Structure of Financial Markets
Fluctuations according to:
the Fibonacci Number Series
Fractal Structure Non-linearity
Asymmetry
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Wave Counting Principle
2nd wave should not exceed the beginning of 1st wave 3rd wave should not be the shortest among 1st. 3rd and 5th wave No overlapping between 4th and 2nd wave (with exception in diagonal triangle) Rule of alteration – 2nd and 4th waves take different wave forms
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End of 2nd wave should not exceed the beginning of 1st wave
5 3 1
1
4
2
2
Wrong
Correct
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3rd and 5th wave
5 3
1
4
2
Wrong
(iii)
(i)
1
(ii)
2
Correct
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3rd wave should not be the shortest among 1st.

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4th wave should not overlap with the 2nd wave (except for diagonal triangle)
5
3 1 4 2 (iii) (i)
Wrong
1 (ii)
2
Correct
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Rule of Alteration – 2nd and 4th wave take different forms
5
3
1
4
Correct
5 2
3
1
4
Correct
2
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3rd and 5th wave will extend
conspicuously 3rd wave would not be the shortest among 1st.com
3 Wave Forms in Impulse Wave (1)
Extension –
One of the 1st . 3rd and 5th wave
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1st wave extension
3 5
3rd wave extension
3
5
5th wave extension
5
1
4
4
3
2
1 1
2 2
4
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3 Wave Forms in Impulse Wave (2)
Diagonal triangle –
Wave structure in upward or downward diagonal
triangle In a form of contracting or expanding triangle The sub-waves in the diagonal triangle take the structure of 3-3-3-3-3 If diagonal triangle appears at the 1st wave. it will take the structure of 5-3-5-3-5 The 2nd and the 4th sub-wave will overlap
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Contracting diagonal Triangular 5th wave
3
5
Expanding diagonal triangular 5th wave
3
5
4
4 1
1
2
2
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Contracting diagonal triangular 1st wave
1
5
3
Expanding diagonal triangular 1st wave
1
5 3
4
4
2
2
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3 Wave Forms in Impulse Wave (3)
5th wave extension –
5th wave failed to exceed the 3rd wave end 5th wave takes a structure of 5-3-5-3-5 failure to have the momentum to breath into new high / low before reversal
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Upward 5th wave failure
3 5 2
Downward 5th wave failure
4
1
1
4
2 3
5
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Corrective Wave Structure
4 simple structures in corrective wave
Zig-Zag Flat
Irregular Horizontal Triangle
2 complex structures in corrective wave
Double Three Triple Three
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Zig Zag (5-3-5)
(ii) bc b (i) (iii) a a (i) (iv) a (ii)
b
(i)
(iv)
(iii) c c (v)
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Flat (3-3-5)
b b a
bc
(ii) b ac (iii) c c (v) (i)
a
(iv)
a
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Irregular (3-3-5)
b b a bc (ii) b (i) (iv)
a
a ac (iii) c c (v)
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Horizontal Triangle (3-3-3-3-3)
b b
d
d
Contracting horizontal triangle
a
e
c
c
e
a
d b
d
b
Expanding horizontal triangle
a c e a c e
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Double-three
b x b
a b a
bc (ii)
b
c
xc
(ii) a (i) (iii)
a
c
(iv)
a bc
a
(i)
(iv) b b
(ii) a (i) (i) (iv) (iii)
ac
(iii) c (v)
c (v)
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Triple-three
b x b x b
a bc
c
a
c
a
bc a (ii) b (i)
c
xc
b a (ii)
(ii)
(iv) a
xc
b
(i)
a
ac
b
(i)
bc (iv) a (iii)
b
(iv)
(ii) a (iv) b
a
ac
(iii) c (v)
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b
(iii)
c (v)
a (i) (i)
(iii)
c (v)
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Elliott Channel (1)
1
2
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Elliott Channel (2)
1
2
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3
Elliott Channel (3)
4
1
2
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Elliott Channel (4)
3
5
1
4
2
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3?
Elliott Channel (5)
1
(1) 5
3 a
1 4
b
2
(2) c
2
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(3) 5
Elliott Channel (6)
1 (1) 5 3 b 2
3
4
a
1
4
(2) c
2
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Elliott Channel (7)
3
a 1 (1) 5 3 a 1 b 2 4 (5) 5?
(3) 5
b
(4) c
4
(2) c 2
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Elliott Channel (8)
(3) 5 b 3 1
(5) 5 3
4
a 1
(1) 5
2
4
(4) c
3 a
1 4
b
2
(2) c 2
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(5) 5
Elliott Channel (9)
(3) 5
b 1
3
2
4
1 3
4
3
a (1) 5 3 1 a 4 (2) c b 1 4 (4) c 2
(a) 5
2
2
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(5) 5
Elliott Channel (10)
(3) 5
b 1
3
2 (b) c a
4 1 3 4
3
a (1) 5 3 1 a 4 (2) c b 1 4 (4) c 2
b
(a) 5
2
2
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(5) 5
Elliott Channel (11)
(3) 5
b
3
2
(b) c
a
1
4
1 3
4
2
3
a (1) 5 3 1 a 4 b 1 4 (4) c 2 b (a) 5
1 3
4
2
(c) 5
(2) c 2
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Frost
Contents
The basic tenets of wave theory The rules and guidelines of wave analysis The scientific background of the Wave Principle and Long term waves
Details R. N.
Item Book Name Editor
Contents
"The Wave Principle" (1938) The Financial World articles (1939) Nature's Law -. Elliott's Masterworks: The Definitive Collection Robert Prechter.The Secret of the Universe (1946)
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Item
Book Name Author
Details
Elliott Wave Principle: Key to Market Behavior Robert Prechter and A.