The general idea, as it is applied to trading in the stock (and other) markets, it that this pattern can be applied to stock charts to call the top or the bottom of a stock move, signaling an investor when to get out or get in. The pattern when applied to a peak is 3 saw tooth up waves followed by 2 down waves, but it can also be applied to a trough (3 down followed by 2 up). What's interesting is that it is purported to be a
FRACTAL pattern. That is, its proponents say it can be applied at any time scale: months, weeks, days, minutes, right down to the most granular unit of time on a market. See this image. (
http://en.wikipedia.org/wiki/Elliott_wave_principle#/media/F...It's interesting, but rather hand-wavy in practice. It's too easy to squint and convince yourself. But it's still a very common "chart reading" technique in the financial world, despite being ~80 years old. (http://stocktwits.com/message/37186386)[stockTwits]