Elliott Wave Theory, or ABC wave theory, is a term for three-wave counter trend price movement. Here, wave A is the first price wave that is against the trend of the entire market. B wave is a corrective wave for wave A. Wave C shows the final price move to complete the counter trend price move.
Points to remember
Alphabetical labeling helps to differentiate between the degree or level of the wave. It speaks to the span of the basic pattern.
The patterns begin with the biggest degree and work their way down to influxes of lesser degree.
There are two sorts of waves: Impulse and Corrective. Impulse waves move toward the bigger degree wave. Corrective waves move against the bigger degree wave.