Eliott Wave - Part 1

Today I want to begin a series of postings on Elliott Wave; my true love within technical analysis. At its core, all the Wave Principle says is that bull markets are followed by bear markets, which are followed by bull markets. This pattern of bull-bear repeats endlessly.

Each market (bull or bear) is made up of one of 13 distinct patterns. These patterns are classified into two groups: Motive or Corrective. Motive patterns define the bull phase of the cycle, corrective patterns the bear phase. Therefore it is correct to say that motive patterns are followed by corrective patterns which are followed by motive patterns, etc.

Here are the Motive patterns: Trending Impulse, Leading Diagonal, Ending Diagonal, Extended Impulse, Truncated Impulse

Here are the Corrective patterns: Zigzag, Double Zigzag, Flat, Expanded Flat, Expanding Triangle, Contracting Triangle, Double Three, Triple Three

As an aside it is interesting to note the prevalence of Fibonacci numbers here. There are 13 patterns, 5 motive patterns and 8 corrective patterns.

To whet your appetite: I am thinking that the rally from March 2009 is a Double Zigzag pattern.