Home  >  115 CFA  > Portfolio Management - Reading 56 - 7. Elliott Wave Theory

7. Elliott Wave Theory

g. describe the key tenets of Elliott Wave Theory and the importance of Fibonacci numbers;

What is Elliot Wave Theory? The stock market moves in repetitive cycles or waves and each wave is a fractal version of its bigger wave.

What are the key tenets of Elliott Wave Theory? The financial market always moves in five waves of the prevailing trend, called impulse waves, and three corrective waves that counter the prevailing trend. The waves count itself is a Fibonacci sequence of numbers.