Pattern Recognition and Fractals
Elliott's market model relies heavily on looking at price charts. Practitioners study developing trends to distinguish the waves and wave structures, and discern what prices may do next; thus the application of the wave principle is a form of pattern recognition.
The structures Elliott described also meet the common definition of a fractal (self-similar patterns appearing at every degree of trend). Elliott wave practitioners say that just as naturally-occurring fractals often expand and grow more complex over time, the model shows that collective human psychology develops in natural patterns, via buying and selling decisions reflected in market prices: "It's as though we are somehow programmed by mathematics. Seashell, galaxy, snowflake or human: we're all bound by the same order."
Read more about this topic: Elliott Wave Principle
Famous quotes containing the words pattern and/or recognition:
“For the man who should loose me is dead,
Fighting with the Duke in Flanders,
In a pattern called a war.
Christ! What are patterns for?”
—Amy Lowell (1874–1925)
“In a cabinet of natural history, we become sensible of a certain occult recognition and sympathy in regard to the most unwieldy and eccentric forms of beast, fish, and insect.”
—Ralph Waldo Emerson (1803–1882)