MTC Education – Elliott Impulses
As Elliott Wave theory is often quite abstract for the beginner, we have decided to work a lot with pictures rather than writing huge novels, which there are more than enough of already. By following this principle, your understanding of the subject will be much better. You will soon realize that only the visualization of the theory will give you the lasting “aha-effect”.
Before we start with the structure of the Elliott Wave Theory (EW) and take a closer look at the internal structures / formations, a few brief words on the background.
The EW theory is based on observations of recurring market sequences that can be traced back to the psychological behavior of investors. Two emotions are of particular importance here – fear and greed. Driven by external factors and influences, these emotions are decisive for the majority of all buy and sell decisions.
This is why we like to refer to it as the “action-reaction” principle of market participants. It is responsible for the resulting price movements, which can be summarized in a comprehensible development pattern.
In this lesson, you will learn the basis of Elliott Wave Theory. It forms the basic structure of all movements in the chart.
As already mentioned, in the introduction, price movements are based on the “action-reaction” principle. This means that an action or build-up is always required first in order to trigger a subsequent impulse (reaction).
The whole thing can be compared to a bow and arrow. First, the bow must be drawn so that the arrow can then be shot. In this case, drawing back the bow is the action and firing the arrow is the reaction. The impulse movement is therefore the drive of a trend movement and consists of a total of five movements. In Elliott wave theory, these movements are also known as waves.
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