Abstract:
This capstone project analyzes the application of the Elliott wave theory
on time-series data from the Forex market. The project uses patternbased
probabilistic models to test the validity of the Elliott wave theory
and to evaluate its predictive power. The results of our analysis indicate
that the pattern-based probabilistic models do not completely support
the Elliott wave theory. Specifically, we found that the patterns identified
by the Elliott wave theory did not have statistically significant predictive
power for daily exchange rates of currencies. This study encourages
further research on this topic with different criteria and larger data sets