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Harmonic Elliott Wave: The Case for Modification of R. N. Elliotts Impulsive Wave Structure - Hardcover
Synopsis
Through hours of research and usage Ian Copsey has unearthed a fundamental error in the structural development of price behavior as defined by the Elliott Wave Principle. From his early findings that trending waves ended prematurely and the vagueness of the wave relationships he began to realize that trending waves do not develop in the manner which R.N. Elliott described in his findings.
In Harmonic Elliott Wave he reveals the methodology, the common ratios that link different parts of the wave structure and provides a wealth of practical examples to explain his findings. Through this methodology he shows how waves develop and dispels the misconceptions that have been common practice by Elliotticians over the years. He supports his methods by consistently ensuring that waves are related by common ratios to help the reader apply the techniques with greater understanding and accuracy.
Q&A with Ian Copsey, Author of Harmonic Elliot Wave
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| Author Ian Copsey |
It became very clear to me several years ago that the impulsive structure Elliott outlined, together with the commonly quoted ratios for forecasting wave endings just didn’t work. I look at professional Elliotticians and amateurs alike and the number of different wave counts for one price chart is astounding. However, they are always retrospective and I haven't really found anyone consistently forecasting accurate stalling areas for each wave.
What are the changes you have made?
Very simply R.N. Elliott considered that impulsive waves are constructed of 5 waves, and on frequent occasions “extend” which means the waves seem to develop in the same “size” as others in the same wave degree. Furthermore, if you look at Elliott's structure each directional wave is made up of 5 waves. The Harmonic structure also displays this same characteristic. However, where Elliott calls these Waves (1), 1 etc I label them Wave (a) and Wave (c) which are both 5-wave moves. However, by observing which waves were related and ignored the structure it was clear that the relationships, are between the 3-wave structures. If you really think of it, the changes really reflect the Dow Theory so it's not an amazing change. One major difference is that in the Harmonic structure impulsive are constant. There are no such things as extended waves or failed fifths which, in my opinion are merely repercussions of the incorrect structure.
How can you be sure that the changes you have made are correct?
Very easily actually! They have enabled me to increase my accuracy by a huge margin, on many occasions to the very point.
What is it that generates the accuracy?
The requirement that wave ratios are present and targets are confirmed across all wave degrees. Without the use of ratios there is clearly no way to forecast wave completions. I think it's important to understand here that Elliott developed his theory in the 1920s. At that time he obviously had to calculate all wave relationships long hand. I had the luxury of a spreadsheet which vastly reduces the time to check relationships and enables a more thorough analysis.
What other benefits are there from the Harmonic wave structure?
Apart from consistency, the requirement for consistent wave relationships at each stage of development reduces the subjectivity of Elliott Wave. It also puts a halt to the common wave labeling without any real understanding of whether waves are related. Analysts and traders simply use key highs and lows to decide where they place wave labels. It just doesn’t work that way. In traditional Elliott Wave almost no attention is made to how deep a correction can be, or what are the common projections. The Harmonic structure has a wonderful consistency and most of the time can identify alternation between Wave (ii) and Wave (iv).
How do other Elliotticians react?
There are two common reactions. The first, and most prevalent, is extreme interest because the Elliottician has found the same frustration as I. The other reaction is complete denial.
Do you get everything right then?
No, it's not the Holy Grail. However, it does give me a much stronger understanding of when I'm right and when I’m wrong, often the precise point at which I'm wrong. While subjectivity is reduced by requiring matching targets across the wave degrees there are always ambiguities and difficulties in identifying some waves in whippy markets.
"synopsis" may belong to another edition of this title.
About the Author
Ian Copsey is a veteran technician having begun his career in Foreign Exchange over 28 years ago. He provides his daily forecasting report on the Forex market through fx-forecaster.com and harmonic-ewave.com.
His book Integrated Technical Analysis has been enjoyed by readers around the world. His experience ranges from working in Barclays' trading rooms in London and Hong Kong, to acting as a technical analyst specialist for Dow Jones Telerate in Tokyo where he provided seminars for bank traders and as the regional manager for technical analysis products in Asia Pacific. He is also an experienced speaker at seminars. He has lived in Asia for over 22 years in Hong Kong, Singapore and Tokyo where he now lives with his Japanese wife.
From the Back Cover
Ian Copsey is one of the most accomplished Elliott Wave practitioners. While respecting the "brilliant findings" of R.N. Elliott, Copsey explains in rich detail how a few changes to the original impulsive wave structure have allowed him to achieve more consistently accurate analysis. Some traditionalists may find his work provocative but Elliotticians of all hues will benefit from his insightful observations.
Alex Douglas
General Manager
IBFX Australia
A few years ago, Ian Copsey had something of an epiphany. He became aware of anomalies in the work of the celebrated financial markets technical analyst, R.N. Elliott. Elliott's Wave Principle proposed that financial markets proceed in a pattern of impulsive and corrective waves. Copsey's computer based research led him to believe that the structure of the waves developed differently than Elliott's works. Based on that research, Copsey proposed strong guidelines for strategies to apply the new "harmonic" wave structures to financial markets. After successfully testing his theory, Ian Copsey has presented, in Harmonic Elliott Wave, a robust argument for his innovative treatment of wave principles.
Larry Lovrenicic
Executive Director at First Pacific Securities
Vice President of the Australian Professional Technical Analysts
In the late 1930's, Ralph Nelson Elliott published his market observations called The Wave Principle. Many forecasters have applied this powerful methodology with success, until they got the wave count wrong. Now, three quarters of a century later, the techniques of trying to fit a wave count is less of a challenge with Ian Copsey's Harmonic Elliott Wave. Ian's 20 years of market observations, aided by computer power, has come out with an objective way of determining wave relationships. All these lead to a more accurate forecast.
Paul Leo
Author
The Ultimate Trading Software
From the Inside Flap
The publication of R.N. Elliott's The Wave Principle in 1938 marked the beginning of the Elliott Wave Movement which has attracted a huge following in the technical analysis community. Author Ian Copsey, a veteran technician, has spent many years testing these theories and believes he has unearthed a fundamental error in the structural development of price behavior as defined by the Elliott Wave Principle. From his early findings that trending waves ended prematurely and the vagueness of the wave relationships he began to realize that trending waves do not consistently develop in the manner that R.N. Elliott described in his findings.
With stubborn fastidiousness he has pieced together a modification of the original Wave Principle that both defines the correct structural development and unearths the common ratios that identify related waves. Subscribers to his daily report often write in amazement at the frequent accuracy of teh trading levels he generates from this process.
In this book he reveals the methodology, the common ratios that link different parts of the wave structure and provides a wealth of examples to explain his findings. Through this methodology he shows how waves develop and dispels the misconceptions that have been common practice by Elliotticians over the years. He supports his methods by consistently ensuring that waves are related by common ratios to help the reader apply the technique with greater understanding and accuracy.
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