Stocks & Commodities V. 34:11 (30–31): Waves And Profit-Taking by Howard Wang

Waves And Profit-Taking by Howard Wang

Stock prices move in wave patterns. But what determines that price movement? Let’s take a look at wave theory to see if it can shed some light … or is there something better?

Even if you’re not familiar with wave theory or subscribe to it, you have probably realized that stock prices move in patterns that resemble waves. Given that prices move in waves, it might seem logical that the movement of stock prices could be determined by wave theory. But can it?

If you think about why waves form, then it makes some sense to use wave theory to analyze the stock market. So why not look at this more closely. I’ll start by considering two essential points of wave theory. The first is that human behavior can be predicted, and the second is that stock market waves are based on human behavior ...