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干炸小黄花鱼尿频尿急Part 2. What is the Harmonic Elliott Wave and how it is different from the classic version of the Wave Principle.
In the first part of this article I noted that the major discovery made by R.N.Elliott in 1930’s was a phenomenon of repeating patters regularly played out by financial markets. More than eighty years ago he studied lf made charts of the US Industrials stock index and discovered that any major trend either up or down had a similar structure that could be subdivided into five distinctive gments or “waves” (e the chart below).
The waves 1, 3 and 5 drive the price in direction of the main trend. In up trend each of tho waves drive price to higher highs. In a down trend each of tho waves push price to lower lows. And waves 2 and 4 are temporary countertrend pullbacks. You can read more details about this pattern in the first part of this article.
But even more important breakthrough he made was the discovery of fractal nature of price
structures. That means that the same price patterns combined together formed identical pattern on a larger scale.合作经营
As you can e on the chart below, Elliott propod a theory according to which waves 1, 3 and 5 of the five wave fractal are themlves subdivided into five waves of a smaller size ( subwaves i, ii, iii, iv and v ).
A word “theory” comes from the Greek theoria, which means “contemplation or speculation.” A theory麻风病是什么症状图片 is a t of organized principles that is suppod to explain some natural phenomenon. In many cas theory is different from practice, when tho organized principles are tested. This is exactly what happened to the Wave Principle formulated by R.N. Elliott. He simply went too far when he propod that waves 1, 3 and 5 themlves reprent smaller five wave patterns. That made the structure too perfect and rigid for mi random price structures. Becau price was reluctant to follow five wave fractal all the time instead of finding a more flexible uniform fractal Elliott propod a number of acceptable exceptions to the original rules. The wide variety of exc
eptions like “leading diagonal”, “ending diagonal” or “truncation” made the Classic Elliott Wave theory highly susceptible to subjective interpretations and difficult to learn and apply in real trading.
In 1999 Ian Copy, an experienced technical analyst who had been practicing the classic Wave Principle for years published a book where he propod a simple and elegant modification to the classic Elliott Wave theory. He propod that the the impulsive waves 1, 3 and 5 within the five wave fractal were subdivided into three waves rather than perfect five waves as propod R.N.Elliott.
He called that modified version of the Elliott Wave theory “the Harmonic Elliott Wave theory”. That was not something completely new becau that modified version acknowledged that the classic five wave fractal is the backbone of any trending move either up or down. Moreover, the modified version did not propo any change to classifications and rules with respect to corrective waves 2 and 4 as originally propod by R.N.Elliot, the founding father of the Wave Principle. However, that small change in su
bdivision of impulsive waves 1, 3 and 5 conquently incread number of waves in direction of the main trend from three (waves 1, 3 and 5 ) to six ( waves A of 1, C of 1, A of 3, C of 3, A of 5 and C of 5 ). And it also incread number of corrective waves from two ( waves 2 and 4 ) to five ( waves B of 1, 2, B of 3, 4 and B of 5 ).
If you are an expert in the classic version of the Elliott Wave theory at this point you may feel anger and denial. You may even feel almost irresistible urge to throw something into your monitor. Give me a cond and I will show you two more charts that may help you to calm down and encourage you to continue reading that provocative text.
Do you recognize that pattern below called by R.N. Elliott “神秘岛的读后感the Leading Diagonal”?
鱿鱼炒韭菜Would you agree that the pattern below called by R.N.Elliott “the Ending Diagonal” has the very same structure? Indeed, all the five waves, impulsive and corrective alike of both, the Leading Diagonal and the Ending Diagonal are subdivided into a-b-c waves.
金泰妍身高Now I would ask you to compare tho two patterns, the Leading Diagonal and the Endin
g Diagonal to the structure of the modified Five Wave fractal propod by the Harmonic Elliott wave I introduced above. Surpri, surpri, they are identical! That confirms that R.N. Elliott himlf recognized that pattern. But the idea that in every five wave fractal waves 1, 3 and 5 are perfectly subdivided into smaller five wave fractals sounded so enticing and elegant so he introduced that pattern for lective u only. As I explained in the first part of this article he was forced to introduce that patter becau he stumbled upon numerous cas when price did not follow the ideal theoretical five wave fractal on a smaller time frame. Instead, in tho cas all the five waves were subdivided into a-b-c’s rather than five subwave fractals.
Now it is you turn to ask what the benefit of that modification is. It turned out that this modified fractal fits the natural path of price much better then the original one. First, you do not longer need to keep in mind numerous exceptions like Ending or Leading Diagonals and you should not worry about “truncations”. Moreover, that new version of the Five Wave fractal perfectly explains cas with extra strong wave 3. The classic version of the Wave principle provides you with specific additional structures called “exten
ded” and “生理期能喝咖啡吗double extended” while the Harmonic Elliott Wave equips you with one legacy five wave structure that fits all the different cas including extended ones
I will dive deeper into detailed comparison of practical application in trading of tho two versions of the five wave fractal in the third part of this article.
