Elliot Waves

R.N. Elliott discerned various types of wave patterns and labeled them. He discovered that there were tow basic types of wave patterns: (1) waves that move in the direction of the main trend of the of market, that is, impulse waves consisting of five smaller waves. And (2) waves that move counter to the market's main direction, that is, corrective waves consisting of three smaller waves.
He further discovered that each wave, whether impulsive or corrective, subdivides into smaller waves and is part of a larger wave. Elliot waves therefore can be analyzed in time periods ranging from a matter of minutes to months and years.
The most difficult part of Elliott Waves analysis is correctly labeling and counting on waves. A correct wave count can lead the analyst to amazing accuracy in forecasting the forex market. An incorrect wave count, of course, will have the opposite result.
Wave counting is quite subjective and usually will result in as many forecasts as there are Elliott Wave forecasters. Because of this it is often said by its harshest critics that Elliott Wave analysis is useful only in hindsight, which is to say that it is not very useful in predicting the future course of the forex market.
Many people may disagree. Many have found that simplicity,proportionality, and flexibility in a wave counting lead to the best results. Your ability is constantly challenged by the market and is always evolving, hopefully to a higher level.
Even if you are not interested in Elliot waves analysis as a forex trader technique for short-term profits, and understanding of Elliott waves still has value because it brings to the forex investor a sense of historical perspective.
Forex Markets never go in one direction forever. Forex markets that go up must come down sooner of later.