In the years after Elliott's death, other practitioners, including Charles Collins, Hamilton Bolton, Richard Russell, and A.J. Frost continued to use the wave principle and provide forecasts to investors. Robert Prechter discovered Elliott's work as a market technician at Merrill Lynch, and used it as a basis for the book Elliott Wave Principle, coauthored with Frost in 1978. Prechter's prominence as a forecaster during the bull market of the 1980s helped bring the wave principle its greatest exposure up to that time.
The Elliott Wave Principle states that markets grow from small price movements by linking Elliot wave patterns to form larger five-wave and three-wave structures that exhibit self-similarity, applicable on all timescales. Each level of such timescales is called the degree of the wave, or price pattern. Each degree of waves consists of one full cycle of motive and corrective waves. Waves 1, 3, and 5 of each cycle are motive in character, while waves 2 and 4 are corrective. The majority of motive waves assure forward progress in the direction of the prevailing trend, in bull or bear markets, but yielding an overall principle of growth of a market.
Ralph Nelson Elliott The Wave Principle Pdf 26
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