Elliott Wave Theory
A framework proposing that price moves in repeating sequences of five waves in the direction of the trend and three against it.
How it is identified
Structure: impulse waves 1-2-3-4-5 in the trend direction, followed by corrective waves A-B-C, with each wave subdividing into the same structure
Unit
qualitative
In depth
The theory's fractal claim means the same 5-3 structure appears at every timeframe, which gives it enormous descriptive flexibility — and that flexibility is its central criticism, since a wave count can almost always be revised to fit whatever happened. Practitioners maintain alternate counts precisely because the primary one so often needs replacing, which makes falsification difficult. It is included here because the vocabulary is widespread and readers will encounter it, not because its predictive claims are established. Nothing in this entry endorses it as a forecasting method.
Worked example
A rise from ₹400 to ₹560 might be labelled as five waves. If price then falls to ₹380, an analyst may relabel the whole move as wave A of a larger correction — the same data, a different count, and no way to have known in advance.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Elliott Wave Theory” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.