Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24
THE GLOBAL WARMING CLIMATE CHANGE MEGA-TREND IS THE INFLATION MEGA-TREND! - 3rd May 24
Banxe Reviews: Revolutionising Financial Transactions with Innovative Solutions - 3rd May 24
MRNA - The beginning of the end of cancer? - 3rd May 24
The Future of Gaming: What's Coming Next? - 3rd May 24
What is A Split Capital Investment Trust? - 3rd May 24
AI Tech Stocks Earnings Season Stock Market Correction Opportunities - 29th Apr 24
The Federal Reserve's $34.5 Trillion Problem - 29th Apr 24
Inflation Still Runs Hot, Gold and Silver Prices Stabilize - 29th Apr 24
GOLD, OIL and WHEAT STOCKS - 29th Apr 24
Is Bitcoin Still an Asymmetric Opportunity? - 29th Apr 24
AI Tech Stocks Earnings Season Opportunities - 28th Apr 24
S&P Stock Market Detailed Trend Forecast Into End 2024 - 25th Apr 24
US Presidential Election Year Equity Performance in the Presence of an Inverted Yield Curve- 25th Apr 24
Stock Market "Bullish Buzz" Reaches Highest Level in 53 Years - 25th Apr 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Why This Wave is Usually a Market Downturn's Most Wicked

InvestorEducation / Elliott Wave Theory May 19, 2020 - 05:08 PM GMT

By: EWI

InvestorEducation

The progression of mass emotions in financial markets "tends to follow a similar path each time around"

The Wave Principle's basic pattern includes five waves in the direction of the larger trend, followed by three corrective waves.

In a bull market, the pattern is five up, followed by three down. In a bear market, the pattern unfolds in reverse: the five waves trend downward and the correction trends upward.


Each of these waves sports its own characteristics.

As the Wall Street classic book, Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter, says:

The personality of each wave in the Elliott sequence is an integral part of the reflection of the mass psychology it embodies. The progression of mass emotions from pessimism to optimism and back again tends to follow a similar path each time around.

For example, strong price advances on high volume typically happen during wave 3 in a bull market. Of course, in a bear market, the strong price action is downward.

Returning to Elliott Wave Principle:

Third waves usually generate the greatest volume and price movement and are most often the extended wave in a series.

Let's review an instance of a third wave in a downturn from recent financial history.

Here's a chart and commentary from Elliott Wave International's Aug. 21, 2015 U.S. Short Term Update:

This week's sharp decline is clearly a third wave. It sports a steep slope with strong downside breadth and volume.

During the next trading session (August 24, 2015), the Dow fell nearly 1,100 points at the open.

As you might imagine, it would be highly helpful to learn how to anticipate third waves so one can prepare.

Indeed, Elliott Wave International has just made the 1-hour course, The Wave Principle Applied, free through May 15 for free Club EWI members. Club EWI membership allows you to get Elliott wave insights on investing and trading, the economy and social trends that you will not find anywhere else.

The Wave Principle Applied normally sells for $99, so you are encouraged to take advantage of this limited-time offer to access the course for free.

As the Wall Street classic book, Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter says:

Without Elliott, there appear to be an infinite number of possibilities for market action. What the Wave Principle provides is a means of first limiting the possibilities and then ordering the relative probabilities of possible future market paths. Elliott's highly specific rules reduce the number of valid alternatives to a minimum.

Get started with The Wave Principle Applied.

This article was syndicated by Elliott Wave International and was originally published under the headline Why This Wave is Usually a Market Downturn's Most Wicked. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in