Expert Chaslau Koniukh
  • Companies
  • Global investment
  • Investors
  • Terminology
  • Economy
  • Stock Market
  • World exchanges
  • Tech and Marketing
Robert Prechter's theory
Market terminology

Robert Prechter’s theory as a tool for analysing market sentiment

11.12.2023
2 min read

Robert Prechter’s theory: an overview of the main formations

Robert Prechter is best known as the author of the theory of social causality. The financier also demonstrated the success of his strategy in practice: his predictions almost always came true down to the last detail. Robert Prechter’s theory produced excellent results in the trading championship. The financier’s score increased by 444%, a record for the event.
Prechter’s strategy is an extension of Elliott Wave theory. According to the author, there is a clear relationship between market price fluctuations and public sentiment. Robert suggested that the mood of society influences economic performance. It is possible to track market behaviour using technical analysis.

Wave Classification, supplemented by Prechter

Traditionally, there are two types of waves: corrective waves and impulse waves. Prechter extended this classification.
According to the type of wave formation, there are:
– motive – figures divided into five waves;
– corrective – divided into three formations.
By function or direction:
– actionary – waves moving in the same direction as the trend;
– reactionary – waves moving against the trend.
Most active formations are moving waves. However, some can be divided into three smaller waves and move in a corrective direction. According to the theory, all counteracting structures develop as corrective structures.
The main characteristic of the driving structures is that the second wave should not deviate more than 100% from the first, and the fourth formation should not fall below the third. In turn, the third structure directs the value above the first peak. However, its size will always exceed the length of the first and fifth structures.Robert Prechter's theory-2

Impulse waves

Moving waves are divided into impulse waves and diagonal triangles waves. The most common type is the impulse, where the fourth formation does not enter the first. Wave extensions can also appear here – elongated in size and with a broad structure. The presence of such formations gives an indication of the length of the following waves.

Diagonal triangles

The figure shows signs of correction and impulse changes. Such triangles are characterised by a unique five-wave structure when the fourth wave completes the first.
In addition to describing the various formations, the theory provides information on the value at which the bear market begins to reverse. Its main sign is the appearance of a correction, especially when it occurs within the fourth wave. Most often, there is a pullback to the level of the previous fourth formation, but at a lower level.

Tags: Market terminology
0
Previous Post Electric car maker VinFast to launch its plant in the U.S. Next Post Chinese alcohol producer Kweichow Moutai: company history

You Might Also Like

callable bond
Market terminology
What is a callable bond and its advantages
18.04.2022
Directional Movement Index
Market terminology
Directional Movement Index as an additional trading tool
14.01.2025
order block
Market terminology
Order block and its use for stock exchange trading
25.11.2023
third-tier stocks
Market terminology
Third tier stocks: risks and benefits of risky assets
07.06.2020
Factoring and forfeiting
Market terminology
Factoring and forfeiting: business benefits
25.10.2020
open interest
Market terminology
What is the open interest in trading
03.01.2021

Popular Posts

  • Ingeborg Mootz: a woman who became a stock player at the age of 75
  • Analysts: Egypt’s economy to continue falling in 2023
  • Businessman Chuck Feeney: the man who gave the world Duty Free
  • Field of activity of the American Monsanto Company Corporation

Editor's Picks

Chaslau Koniukh
Analytics

American bankers from JPMorgan and Goldman Sachs advise to invest in gold: review by Chaslau Koniukh.

Press Secretary
17.08.2020
Expert Chaslau Koniukh
Analytics

Chaslau Koniukh on the analysts’ opinion on the key stake size change soon

Press Secretary
18.06.2020
expert Chaslau Koniukh
Analytics

Chaslau Koniukh: Internet trade market in Russia may reach 2.78 trillion rubles.

Press Secretary
30.05.2020
Will the U.S. oil shale industry be able to quickly recover from the crisis: A Review by Chaslau Koniukh
Analytics

Will the U.S. oil shale industry be able to quickly recover from the crisis: A Review by Chaslau Koniukh

Press Secretary
16.05.2020

Popular Posts

  • Ingeborg Mootz: a woman who became a stock player at the age of 75
  • Analysts: Egypt’s economy to continue falling in 2023
  • Businessman Chuck Feeney: the man who gave the world Duty Free
  • Field of activity of the American Monsanto Company Corporation
  • Spain’s economy performs best in the EU
Expert Chaslau Koniukh
  • Facebook
  • Twitter
  • Instagram

© 2024 CHASLAU KONIUKH. ALL RIGHTS RESERVED. Expert in marketing and project management, international investments, financial analyst.

Menu

  • Biography
  • Companies and corporations
  • Global investment
  • Investors and Entrepreneurs
  • Economy
  • Market terminology
  • Stock Market
  • World exchanges
  • Tech and Marketing
  • Analytics