shout out to u/ChristianRauchenwald for the world class DD!
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Elliot Wave Theory
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https://preview.redd.it/l0vdexj5ohn61.png?width=1833&format=png&auto=webp&s=41320130f91b5347a393774aedaf563a91b461a1
Elliot Waves for GME - What that means, further below...
I know most of you likely never heard the name Ralph Nelson Elliott and his surprisingly called "Elliot Wave Theory". If you want to change that, I recommend you read the free book here. But since I know that most of you are too busy eating crayons I'm going to summarise it quickly.
A rare recording of Ralph Nelson Elliot's early days.
As you can see, our fellow 🦍 Ralph already had a real hunger for tendies as a little kid. That hunger drove him to use his crayons on charts until he discovered in the 1930s that the stock market always moves in recognizable patterns back, so-called "waves".Simplified there are only two types of waves:
- Impulse
- Corrective
Impulsive Waves
Those are always waves that move the market and consist of five sub-waves because five is the smallest number of waves that can accomplish an overall movement.
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https://preview.redd.it/7zcxlzn7ohn61.png?width=535&format=png&auto=webp&s=6c7d5d431d351b8011ef4a5b4fa4fb123b4ee064
Impulsive Wave on GME Weekly Chart
Corrective Waves
Although there are a few different corrective patterns we can say in general that they consist of three waves because that's the smallest number needed to achieve a retracement.
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https://preview.redd.it/bf1arfybohn61.png?width=382&format=png&auto=webp&s=e7503b533893b2ab4b05ddc4ac04df20675939cf
Corrective Wave on GME Daily Chart
There are a few special cases, and obviously overall more to learn about it, otherwise, there would hardly be an entire book about it.
Before we now take our colorful crayons and applied that mindblowing knowledge on GME there are a few other things you should understand:
- Each wave can and should contain waves in itself. 🤯 I know... Sounds complicated, and often is, but to give you a simple example, in the 1-2-3-4-5 Impulsive wave above, you'd be able - possibly not on the monthly chart but on weekly or lower - to also fit another 1-2-3-4-5 between 2 and 4.This way you can confirm if your patterns are actually valid.
- Each 1-2-3-4-5 Impulsive wave is followed by a corrective wave. So, after 1-2-3-4-5, we see a corrective pattern like A-B-C. (There are a few other corrective patterns but the basic A-B-C zig-zag is most common).
So you are telling me that fellow 🦍 Ralph knew how to predict the market almost 100 years ago? Sure...
Elliot Waves are highly accurate and in my opinion a great tool to predict what the market or a specific stock is going to do.
Unlike most indicators it doesn't lack behind, however, there are still cases where multiple patterns could be applied and only once a few more candles are on the chart will it be clear which of those actually is correct.
Already during our first 🚀 launch attempt that got canceled by RobinHood and others, I used Elliot Waves to estimate how far that rocket might go.
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https://preview.redd.it/ktfxk4aeohn61.png?width=1544&format=png&auto=webp&s=aaadea58e519cfb08c76a483298b9d56e83ad4bb
Screenshot using Elliot Waves on the GME 15 min chart on the 25th of January
I shared that screenshot initially here and mentioned in a further reply once we reached that range that a drop in the range of $137-$207 will likely follow before our 🚀 finally will launch to more than $4,000 per share.
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https://preview.redd.it/3iokow4gohn61.png?width=1552&format=png&auto=webp&s=d721faa86a85d269ba2f45abd2ac9194b467f6ec
What actually happened after that "prediction"?
As you can see both statements were hi