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I’ve written before that I value Elliott Wave analysis for it’s theoretical value more than it’s practical value. I simply haven’t found that it can be applied rigorously with any accuracy. I believe it’s value is in it’s concepts, more loosely applied.

One of the fundamentals of Elliott Wave analysis holds that corrective waves (in contrast to impulsive waves) follow an A-B-C pattern, as shown in the long-term chart of GE above. The A and C waves usually mirror each other.

Both the A and C waves in this example equal roughly 30 points. In addition, wave B retraced 61.8% of wave A. Both 0.618 and 0.382 (it’s inverse) are very important numbers to EW analysis as the basic theory states that the golden ratio (and it’s inverse) is pervasive in natural systems.

Elliott Wave practitioners would point to this example of GE as proof of the system’s predictive ability. I simply find it fascinating, as I do the popular novel featuring the golden ratio, “The Da Vinci Code.”