acrotec.com

1

acrotec.com

Background

Ralph Nelson Elliott) (1871 - 1948) studied the wave phenomena of the US stock market in 1934

Published the “Wave Principle “ in 1938

Published the “Nature Law” in 1942

In 1970s, Robert Prechter, Jr. made Elliott Wave Theory popular in the investing communities

2

acrotec.com

Theory Outline

Market fluctuations due to: Impulse Wave

Corrective Wave

Impulse wave follows the trend

composes of 5 sub-waves

Corrective wave moves against the trend

Composes of 3 sub-waves

Waves within waves

3

acrotec.com

1

2

3

4

(1) 5

(2) c

a

b

1

2

3

4

(3) 5

a

b

(4) c

1

2

3

4

(5) 5

1

2

3

4

(a) 5

a

b

(b) c

1

2

3

(c) 5

4

Waves within

Waves

By counting waves in the long term to short term charts, forecasting can be made

4

acrotec.com

Time / Price Structure of

Financial Markets

Fluctuations according to:

the Fibonacci Number Series

Fractal Structure

Non-linearity

Asymmetry

5

acrotec.com

Wave Counting Principle

2nd wave should not exceed the beginning

of 1st wave

3rd wave should not be the shortest

among 1st, 3rd and 5th wave

No overlapping between 4th and 2nd wave

(with exception in diagonal triangle)

Rule of alteration – 2nd and 4th waves take

different wave forms

6

acrotec.com

1

2

3

4

5

1

2

CorrectWrong

End of 2nd wave should not exceed

the beginning of 1st wave

7

acrotec.com

1

2

3

4

5

Correct

Wrong

1

2

(i)

(ii)

(iii)

3rd wave

should not be

the shortest

among 1st, 3rd

and 5th wave

8

acrotec.com

1

2

3

4

5

Correct

Wrong

(i)

(ii)

(iii)

1

2

4th wave

should not

overlap with

the 2nd

wave

(except for

diagonal

triangle)

9

acrotec.com

1

2

3

4

5

Correct

Correct

1

2

3

4

5

Rule of

Alteration –

2nd and 4th

wave take

different

forms

10

acrotec.com

3 Wave Forms in Impulse Wave (1)

Extension –

One of the 1st , 3rd and 5th wave will extend

conspicuously

3rd wave would not be the shortest among

1st, 3rd and 5th wave

11

acrotec.com

1

2

3

4

5

1

2

3

4

5

1

2

3

4

5

1st wave

extension3rd wave

extension

5th wave

extension

12

acrotec.com

3 Wave Forms in Impulse Wave (2)

Diagonal triangle – Wave structure in upward or downward diagonal

triangle

In a form of contracting or expanding triangle

The sub-waves in the diagonal triangle take the structure of 3-3-3-3-3

If diagonal triangle appears at the 1st wave, it will take the structure of 5-3-5-3-5

The 2nd and the 4th sub-wave will overlap

13

acrotec.com

1

2

3

4

5

Contracting

diagonal

Triangular

5th wave

1

2

3

4

5

Expanding

diagonal

triangular

5th wave

14

acrotec.com

1

2

3

4

5Contracting

diagonal

triangular

1st wave

Expanding

diagonal

triangular

1st wave1

2

3

4

5

15

acrotec.com

3 Wave Forms in Impulse Wave (3)

5th wave extension –

5th wave failed to exceed the 3rd wave end

5th wave takes a structure of 5-3-5-3-5

failure to have the momentum to breath into new high / low before reversal

16

acrotec.com

1

2

3

4

5

Upward 5th wave

failure

Downward 5th wave

failure

1

2

3

4

5

17

acrotec.com

Corrective Wave Structure

4 simple structures in corrective wave

Zig-Zag

Flat

Irregular

Horizontal Triangle

2 complex structures in corrective wave

Double Three

Triple Three

18

acrotec.com

Zig Zag (5-3-5)

a

b

c

a (i)

(i)

(ii)

(iii)

(iv) a

b

b c

(i)

(ii)

(iii)

(iv)

c (v)

19

acrotec.com

Flat (3-3-5)

a

b

c

a c

a

b a

b

b c

(i)

(ii)

(iii)

(iv)

c (v)

20

acrotec.com

Irregular (3-3-5)

a

b

c

a c

a

b a

b

b c

(i)

(ii)

(iii)

(iv)

c (v)

21

acrotec.comHorizontal Triangle (3-3-3-3-3)

a

b

c a

b

c

d

e

d

e

a

b

c

a

b

c

d

e

d

e

Contracting

horizontal

triangle

Expanding

horizontal

triangle

22

acrotec.comDouble-three

a

b

x c

a (i)

(i)

(ii)

(iii)

(iv) a

b

b c

(i)

(ii)

(iii)

(iv)

c (v)

a c

a

b a

b

b c

(i)

(ii)

(iii)

(iv)

c (v)

a

b

c

x

a

b

c

23

acrotec.com

Triple-three

a

b

x c

a (i)

(i)

(ii)

(iii)

(iv) a

b

b c

(i)

(ii)

(iii)

(iv)

c (v)

a c

a

b a

b

b c

(i)

(ii)

(iii)

(iv)

c (v)

a

b

c

x

a

b

c

bx

a c

a c

a

b

a

b

b c

(i)

(ii)

(iii)

(iv)

c (v)

a

b

x c

24

acrotec.com

1

2

Elliott Channel (1)

25

acrotec.com

1

2

Elliott Channel (2)

26

acrotec.com

1

2

3

4

Elliott Channel (3)

27

acrotec.com

1

2

3

4

5Elliott Channel (4)

28

acrotec.com

1

2

3

4

(1) 5

(2) c

a

b

1

2

3?

Elliott Channel (5)

29

acrotec.com

1

2

3

4

(1) 5

(2) c

a

b

1

2

3

4

(3) 5

Elliott Channel (6)

30

acrotec.com

1

2

3

4

(1) 5

(2) c

a

b

1

2

3

4

(3) 5

a

b

(4) c

(5) 5?

Elliott Channel (7)

31

acrotec.com

1

2

3

4

(1) 5

(2) c

a

b

1

2

3

4

(3) 5

a

b

(4) c

1

2

3

4

(5) 5

Elliott Channel (8)

32

acrotec.com

1

2

3

4

(1) 5

(2) c

a

b

1

2

3

4

(3) 5

a

b

(4) c

1

2

3

4

(5) 5

1

2

3

4

(a) 5

Elliott Channel (9)

33

acrotec.com

1

2

3

4

(1) 5

(2) c

a

b

1

2

3

4

(3) 5

a

b

(4) c

1

2

3

4

(5) 5

1

2

3

4

(a) 5

a

b

(b) cElliott Channel (10)

34

acrotec.com

1

2

3

4

(1) 5

(2) c

a

b

1

2

3

4

(3) 5

a

b

(4) c

1

2

3

4

(5) 5

1

2

3

4

(a) 5

a

b

(b) c

1

2

3

(c) 5

4

Elliott Channel (11)

35

acrotec.comItem Details

Book Name Elliott Wave Principle: Key to Market

Behavior

Author Robert Prechter and A.J. Frost

Contents The basic tenets of wave theory

The rules and guidelines of wave analysis

The scientific background of the Wave

Principle and Long term waves

Item Details

Book Name R. N. Elliott's Masterworks: The Definitive

Collection

Editor Robert Prechter, Jr.

Contents "The Wave Principle" (1938)

The Financial World articles (1939)

Nature's Law -- The Secret of the Universe

(1946)

36