"Herding behavior takes the form of Elliott Wave"
What Is Elliott Wave?
Elliott Wave is a detailed catalogue of price pattern that a market forms. This repetitive form is caused by herding behavior of market participants. It takes two general patterns: 5-waves impulsive pattern and 3-waves corrective pattern. This pattern was first found by R.N. Elliott and later improved and made famous by Robert Prechter.
Why Elliott Wave?
This is the ONLY analysis that links the swings in investors mood with price structure. Not only Elliott Wave gives us big clue to what will happen to price and its associated sentiment in investors and media psychology, it also gives us definitive invalidation point where we are wrong. This last point is unique to Elliott Wave. Applied correctly, it is no exaggeration that the title of the book that introduced the world to Elliott Wave is 'Elliott Wave Principle: Key to Stock Market Profits'.