Both, the classic and the modified versions of the Elliott Wave theory are based on the fundamental discovery made by R.N.Elliott in 1930’s. After reviewing numerous self-made price charts of stocks and commodities he noticed that price for different assets at different times kept followed a number of similar patterns. Specifically he noted that any trending move in the stock market followed a pattern he called the “Five Waves”. To make it possible to recognize that pattern R.N.Elliott identified five integral parts of that pattern and called them “waves” (see the chart below).