Elliott Wave Theory can look intimidating at first glance, with its nested waves and Fibonacci ratios, but the core idea is simpler than it appears: markets move in repeating patterns because crowd psychology itself repeats.
The Five-Wave Impulse
In the direction of the main trend, price typically advances in five waves — three moving with the trend, two counter-trend corrections in between. Each wave reflects a shift in crowd sentiment, from early accumulation through euphoric participation.
The Three-Wave Correction
Once the impulse completes, price usually corrects in a three-wave pattern before the next impulse begins. Recognising which wave you're likely in helps set realistic expectations for how much further a move might run, or how deep a pullback might go.
Elliott Wave works best as context, not a standalone entry signal. In our Advanced Technical Analysis course, we pair it with market structure and volume to avoid forcing wave counts onto ambiguous price action.
