In late 1930s R.N. Elliott discovered that the stock market is not as random as it seems to be. In fact, the stock market moves in repetitive cycles or waves and each wave is a fractal version of its bigger wave. One of the discoveries is that the financial market always moves in five waves of the prevailing trend, called impulse waves, and three corrective waves that counter the prevailing trend. The waves count itself is a Fibonacci sequence of numbers.

Elliott Wave Theory was made popular by Robert R. Prechter, Jr. in one of his bestseller Elliott Wave Principle: Key to Market Behavior.