Impulse Wave Pattern

We humans can be impulsive, so it makes sense that the stock market could be, too. The impulsive wave pattern refers to little waves that trend strongly upwards or downwards, showing that the underlying trend of the stock is up or down. Impulse wave patterns can be any length of time...from a few hours of ups and downs to a few years.

Impulse wave patterns are related to the Elliott Wave Theory, a theory from the 1930s of recurring wave patterns used to determine price movements in securities markets...and nothing to do with that human kid's final goodbye in E.T..

For those who favor the theory, five waves going in a general upward direction signals a bull market. This, along with other numbers of corrective waves, are actually Fibonacci numbers.

Mind blown, yet?

All of this wave theory hubbub is technical analysis of markets, created by smart and observant mathematicians and investors, which can be combined with other methods for predicting price movements.