The Elliott Wave Theory was developed by Ralph Nelson Elliott in the 1930s as an effective tool to speculate the stock market. The Elliott waves are a form of technical analysis that derives the price movements by correlating the changes among investors’ sentiments and psychology.
Even though the stock or crypto market seems to behave in a random manner, there are repetitive patterns known as waves. Investors who can identify the market trends are described as ‘riding a wave.’
According to the Elliott Wave Theory, waves can be categorized differently. An impulse wave can be identified when five consecutive waves show up in the same direction as the overall trend. Corrective waves on the other hand flow in the opposite direction.