The Elliott Wave theory gained popularity in 1935 when Elliott made a prediction of a stock market bottom. To this day, price fluctuations in the financial markets still pose somewhat of a conundrum for the scientific community. However, in the early 1900s, theorists were already trying to link the markets’ behaviour with nature, an innovative concept known as “biomimicry” and the basis for the Elliott Wave theory.
Ralph Nelson Elliott is still considered by many the only worth successor to Charles Dow in analysing market movements. He not only confirmed Dow’s studies, but also introduced a series of more precise definitions for each market phase. In particular, he added a series of forecasting elements that no longer merely identified market trends (upward or downward), but also calculated achievable price levels. In a similar way to Dow theory, the Elliott Wave theory distinguishes price movements in terms of waves.
Overall, Elliott’s approach aimed to find a synthesis of the laws that govern natural phenomena, of which the stock market is simply an aspect. Elliott placed great importance on the systematic observation of nature in order to grasp its most significant cycles.