Nitty-Gritties of the Harmonic Elliott Wave theory that make it a superior trading tool.
This is the final part 3 of the article “The classic Elliott Wave theory is dead — Long Live the Modified and Better Elliott Wave theory!”.
Part 1. Why the classic Elliott Wave theory is useless in trading.
In the previous two parts of this article I explained what an amazing discovery made R.N.Elliott when he noted that markets not only follow similar patterns but those patterns are also subdivided into fractals, similar patterns of smaller size.
The main challenge for Elliott was to identify the most common features of that repeating pattern in order to propose formal rules that would define that pattern and make possible to use that discovery in practical trading and investing. His method was to break down that pattern into major components, waves, label them and check if those waves follow specific relationship to each other. It may sound simple but it is always a challenge to describe a natural phenomenon in a pain language of formal rules.
Apparently Elliott intuitively liked the simple and elegant solution. He came up with a theory that waves 1, 3 and 5 inside the repeating…
