The wave principle posits that collective investor psychology moves from optimism to pessimism and back again in a natural sequence. These swings create patterns, as evidenced in the price movements of a market at every degree of trend.
Elliott's model says that market prices alternate between five waves and three waves at all degrees of trend. Within the dominant trend, waves 1, 3, and 5 are "motive" waves, and each motive wave itself subdivides in five waves. Waves 2 and 4 are "corrective" waves, and subdivide in three waves. In a bear market the dominant trend is downward, so the pattern is reversed—five waves down and three up. Motive waves always move with the trend, while corrective waves move against it.