One method of Forex Trading is based on the Elliott Wave Principle, named for it discoverer Ralph Elliott. The bulk of his work was completed in the 1930s and 1940s. The Elliott Wave Analysis measures investor psychology, which is the real power house behind the financial markets, such as the forex market. An Elliottician identifies the market structure and anticipates the most likely next move. This all comes to play in foreign currency trading.
The wave shows the steps human beings go through when they are part of an investment crowd from the extreme point of pessimism at the bottom to the extreme point of optimism at the top. People don't change that much so these trends repeat themselves over and over, regardless of news and extraneous events. The patterns become recognizable and therefore predictable on when and how to make a foreign currency trade, for example.
This is a 5 wave pattern. The stock market is always somewhere in the basis 5 wave pattern as is the Forex Market. All other patterns are subsumed by it.
