Forex technical analysis theory - what is the wave theory?

Many friends who speculate in foreign exchange have heard of the wave theory, and some friends use the wave theory in actual foreign exchange trading operations. The wave theory is actually a basic theory of foreign exchange technical analysis. So what is the specific content of the wave theory? How is the wave theory used in actual foreign exchange? Good or not? The following article will take you to understand the wave theory.

Basic content of wave theory:

The wave theory is a market analysis theory discovered and proposed by American securities analyst Eliot. The wave theory holds that the market trend keeps repeating a pattern.EC ForexEach cycle consists of five rising waves and three falling waves. The premise of this theory is that when the exchange rate follows the main trend, it fluctuates in the order of five waves, and when it goes against the main trend, it fluctuates in the order of three waves. Long waves can last for more than 100 years, and the duration of secondary waves is rather short.

The basic feature of wave theory can be summed up in one sentence, that is, the "eight-wave cycle".

Wave theory flaws:

The wave theory has significant flaws in the practical application of foreign exchange. For example, among the many waves in the foreign exchange market, what is a complete wave? Has one wave been completed and another wave started? Under what criteria or time can the wave stretch? These are all questions that plague many investors.

Therefore, in actual combat, the wave theory can only be regarded as a set of subjective analysis tools, without objective criteria. Foreign exchange transactions based on this subjective analysis are often prone to errors or even failure.