Abc Wave Theory
The ABC Wave Theory, also known as Elliott Wave Theory, is a method used to predict the direction of stock market trends by identifying recurring patterns of waves over time. Developed by Ralph Nelson Elliott, the theory suggests that market movements follow a repetitive cycle of 5 motive or impulse waves in the direction of the trend, followed by 3 corrective waves against the trend. The 5 impulse waves represent the main trend, while the 3 corrective waves indicate a retracement or correction within that trend. This cyclical pattern helps analysts forecast future market movements based on past behavior.
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