Working with the Modified Wave Structure in Forecasting

Working with the Modified Wave Structure in Forecasting

Introduction

Until this point in the book, I have concentrated on describing Elliott's basically brilliant findings, his observations on the structure in which market prices develop, and then laying down the foundations for my claim that the impulsive wave structure was misjudged. I repeat the view that Elliott did not have the benefit of having modern spreadsheets which calculate a wide range of projection ratios that can be used for any time frame, from one minute to monthly. Elliott had to do all this in long hand, which limited his ability to fully analyze wave relationships in detail.

The majority of examples I gave in Chapter 4 were live as I have been writing, and clearly I have picked them as, in my opinion, they demonstrate the validity of the modifications I am proposing and which I use every day in my analysis. The ratios match not only in one wave degree but harmoniously across all wave degrees. Above all, this attracts me as I feel this is the way the natural order of the world works.

Did I forecast all of the examples? No I didn't, but I did get quite a few correct, and with pinpoint accuracy.

Is this the Holy Grail? Not at all. It is a very intensive method of analysis and requires constant attention. When it all comes together, the accuracy astonishes not only my subscribers but even takes my breath away at times. Some subscribers appear to think I am psychic. Unfortunately the new ones then forget money management and raise the risk levels, so that when the structure adapts or morphs into another pattern they lose too much.

So as in just about all books the examples look like great, shining examples of the power of the technique; however, this chapter is intended to provide guidance on how to approach the Harmonic Elliott Wave method, clues to spot when the structure is breaking down, how to integrate the different wave degrees to ensure a higher level of accuracy, and how to identify whether a projection or retracement is going to hold a particular forecast level.

I have chosen examples that replicate some of the issues I have faced after first recognizing that Elliott's original impulsive structure was incorrect and offering practical guidance in how to approach forecasting, the difficulties that can be faced, and general hints and tips to assist your progress in mastering the technique.

To provide a reminder of the relationships between waves I shall repeat those provided in Chapter 3.