What is the Elliot Wave theory in Forex trading?
The Elliot Wave theory was developed by Ralph Nelson Elliot in the year 1920. The direction in which the market is moving and patterns followed are predicted by the Elliot Wave theory. According to the theory, the forex market moves in 5-3 cycle. It first moves in series of 5 swings upwards followed by 3 swings back ward or back down. This concept appears to be very simple but the main aspect that needs to be considered is the timing. It is difficult to predict the exact time when the market will be in the position of 5 swings upwards and 3 swings back down. The cycle goes on incessantly. 5 waves move in one direction followed by 3 “corrective” swings back down. These waves are again composed of several other waves. And there are subsets as well as supersets of these waves again. If you are aware of the starting point of the cycle and can correctly interpret the direction of the market, it can be of immense help to you as you can predict the movement of the FX market and it would also
