What Is Elliott Wave Theory?
The short version: price moves in five waves with the trend and three waves against it, because crowd sentiment expands and contracts in a rhythm.
Updated August 2026 · 2 min read
The 5-3 cycle
A full Elliott cycle has eight waves: a five-wave motive phase (1-2-3-4-5) in the direction of the trend, then a three-wave corrective phase (A-B-C) against it.
- Waves 1, 3 and 5 push the trend forward — wave 3 is usually the longest.
- Waves 2 and 4 are the pauses that shake out weak positions.
- A-B-C gives most of the move back before the next cycle starts.
Why it works on every timeframe
Each wave is built from smaller waves of the same shape. A wave 1 on the daily chart is a complete five-wave sequence on the hourly. That is why the same labels work on a 5-minute crypto chart and a monthly index chart.
The fastest way to learn it
Reading the structure takes minutes; recognising it live takes repetition. WaveMaster gives you guided lessons and 63+ interactive chart exercises where you label the waves yourself and get instant feedback.