Commander in Pips: He analyzed charts from yearly to half-hourly. In August 1938 he detailed the results of his studies by publishing his third book (written in collaboration with Charles J. Collins), called The Wave Principle. Elliott said that while the stock market prices may appear random and unpredictable, they actually follow predictable, natural laws and can be measured and forecast using Fibonacci numbers. Later, he has to added and improved his book… Pipruit: Ok, ok. It’s very interesting… What the major idea of his theory? Commander in Pips: Well, according to his theory there are two major forces that move markets – psychology and emotions. Emotions could appear from some outside influences. Today we can point such sources as mass media – CNBC, Bloomberg and other channels, Fed statements, macro data releases and others. Under these reasons, markets do not behave in chaotic manner, but in repetitive cycles. Mr. Elliot said, that as upswings as downswings are driven by this collective psyche or emotions, and hence these human characters are based on the nature – they repeat again and again. That’s why by the way he used Fibonacci numbers, because they also come from nature and hence should be easily combined with Wave theory without any contradiction, since they both are based on nature. He called these upward and downward swings as “Waves” and said that if you able to estimate what wave is currently take place – you will be able to estimate further price movement. It’s obvious that you should have enough skills to correctly identify these repeatable patterns in price behavior.