Comment by Jason on April 28, 2012 at 2:24pm

Hi Everyone

Just came on line and read with interest into all the discussions by many here, Peter. Raj Spiro, Keith and Ian....

Perhaps I just my 2 cents worth of opinion onto this EW count episode.

I have read Robert Pretcher's book and have also happened to follow his EWI service...and I also happen to know something about Ian as well...

Pretcher's EWI is the traditional EW with 5 waves impulsive and 3 waves corrective.

My take about EW is that it can be a great analysis tool but sometimes it will fail quite badly if you use it to time entry or take positions as there are just too many permutations and wave counts. This can make analysis very haphazad and uncertain. For eg...if there are 5 waves down and we will view any correction after that as a pull back and look to sell rallies with fabonacci areas of 32.8 and 68.2 and so forth. But sometimes market in real life sucker punch you and in EW...there are always alternative scenarios to consider. So if the rebounds extend too far...we will have to count them as impulsive if it develops further. This can be detrimental because we would have gone short but the market rebound turns out to be impulsive and we will get caught short. A recent good example is the GBP move from 1.5830 region to 1.62 region. Pretcher's EW counted it as a rebound until it broke the 1.61 region and after that the alternate takes over to become wave 3 impuslive move with target of wave 5 above 1.63. But if you have gone short assuming that the rebound is corrective, we would have been out more than 200 pips...

Ian's method of Harmonic Elliot wave is of a 3 wave form...as he doesnt subscribe to the 5 waves up and 3 waves down theory. Like what Ian said, Harmonic EW can be very accurate if one gets it right. But there are so many conflicting waves and structures with so many ratios and fractals...and it may be difficult to get it right. No offense to Ian, I have seen him get the ratios and structures right before but I have also seen him got it wrong big time.

So my take is EWI (whether traditional or Harmonic) is a subjective analytical system that is good as a additional tool for analysis. But to place to much emphasis on it as a trading method / system may not be so helpful as it may not be dynamic enough...Sometimes its so difficult to spot the various structures and alternates and markets have to show itself real well before we can determine the exact structure. By that time, the market will have most probably ran off or gone against us if we are on the wrong side.

I hope I dont offend anyone with the above views. I am just writing to share my personal experiences in using both systems before.

Have a good weekend.

Comment by Peter jcp on April 28, 2012 at 3:01pm

Hi Brian - just noticed your comments -  I certainly welcome other experienced traders and analysts views and look forward to your future comments etc etc  Have a great May - regards Peter

Comment by Ian Copsey on April 28, 2012 at 6:07pm

Jason

You are correct to some extent but have missed out much of the discussion...

First, Harmonic  IS  5 up and 3 down. However, the 1,3 & 5 are in 3's which eliminates the extensions and failed fifths.

There has already been discussion about EW being a system and we've already stated that it is not a system but an indicator. You should never, ever take EW as a signal service. It is an indicator of price action. There must be use of an entire tool box to confirm the areas suggested as being points where waves are expected to stall. 

Yes, everyone makes errors and that should be understood. I do make errors and when they are in the larger time frame, particularly in a daily time frame (and din a corrective structure), the reaction is "how the heck can he get it that wrong." However, the same error in the 5-min or hourly time frame is seen as a just a minor error. Actually, EURUSD has been in a weekly corrective structure since 2008! However, all this implies that you need to understand the "coding" of the technique to take most advantage of it. 

Comment by raj patel on April 28, 2012 at 7:47pm

Ian

Dont take jason's summation as a failure in  a bigger picture we have to be far more tollrent to constructive  criti. remaining the bigger man is what gives the impetus to remain on top of the game. draw comfort from the fact that discovery of uniquesness is your baby  and be proude  of the fact.

Comment by Ian Copsey on April 28, 2012 at 10:25pm

Hi Raj

I have no problem with the core of what Jason said. However, I did feel that he had glossed over the fact that we had already covered much of the mistake of treating EW as a trading system which is a prevalent mistake in the market and one I attempted to address in Integrated Technical Analysis.

On getting things wrong - of course, I have made some major blunders! They are inevitable when you put yourself in a position of providing a forecasting service. People love to knock you down...  It comes with the territory. However, I did want to put them into perspective in terms of short term & long term events. They are the same - but the larger time frame amplifies the issue.

The last really big one was the Euro made it's huge sideways mess of a consolidation just below 1.4940 still gives me the shivers! I made a blunder on Friday - though shorter term - I had been looking for 1.3250-85 since a couple of days after the 1.2994 low and had a great stretch calling just about every turning point within very small margin or error - it reached there on Thursday and so I was looking for a deeper retracement... So Friday hurt and it seems I made an misjudgment in the rally from 1.3104 and hadn't expected the penultimate move to penetrate the 1.3250 level... So I suspect the 1.3285 area will now cap... maybe just above I haven't done the analysis yet. 

That in itself shows that we need a full tool box... 

Otherwise I do take a certain amount of pride in Harmonic Elliott Wave though to be honest it really is a small change and with the help of a spreadsheet and a healthy dollop of determination to try and work the puzzle out. People have been angry with me saying that I shouldn't use "Elliott Wave" and should have called it a different name (and that I'm insulting R.N. Elliott...) but if I did use a different name it would be a bigger insult as I could never, ever have worked out the corrective structures. That was the real genius behind Elliott... (Even then, they are the cause of most problems!)

Comment by Jason on April 29, 2012 at 12:04am

Hi Ian

 

Morning.

JUst got back on line and will be here for only a few moments but will like to take an opportunity to say the following.

I apologise if my comments have offended you. Please do not take offense.

I know you are a great guy and you are very well versed with technical analysis and EW...and you have developed your own Harmonic EW.

To your credit, I know you have called the markets right on many occasions and EW or Harmonic EW can be very accurate too....

But what I am trying to point out is the EW or Harmonic EW can have their downside and because there can be so many conflicting possibilites that if we dont get the ratios or structure right, we can get it wrong really big time (as like what I mentioned the Pretcher's EWI team got the GBP really wrong big time last and this week. Now they have turned bullish with impulsive structures but only when GBP have rallied more than 200 pips).

Yes. I have read your mention that EURO is in a consolidation since 2008 and the decline from 1.49 still hasnt really shown the real direction yet. A lot of eminent guys (including yourself) have been callling for USD strength but so far the USD strength is not so pre-dominant. There are very flips and flops and whipsaws so I think in general it is very difficult for anyone to really call the markets right all the time.

I am not out to run you down as I think in general you have gotten the analysis right...albeit some mistakes.

Keep up the good work and looking forward to learning from you.

Have a good weekend.

Comment by Ian Copsey on April 29, 2012 at 12:38am

Hi Jason

No offense taken. It is very valid to bring up the fact that with any single technique cannot solve the entire puzzle and this is something several people including Gonçalo and I have raised in the discussion. In particular Forex is a much noisier market so the room for error is greater and can generate whips a lot faster than other markets. It is something that I wish more people understand and control their expectations ... and not use EW as a trading signal but as information. It is also important for people to understand we can make mistakes and at times (hopefully not too often...:) ) pretty drastic ones... However, I felt it also valid to point out the need for perspective in terms of time frames. (Soros lost US$600m in ONE DAY in 1995 when he called USDJPY higher - when thankfully that time I was bearish!)

Yes, I am bullish Dollars - but not yet. Many, many people have been calling the Dollar higher directly. I have not. I see strength through to 2017 but I have been calling the Dollar lower since the end of January in the medium term time frame before the Dollar takes off. You may find this article of interest:

http://harmonicelliottwave.blogspot.jp/2012/03/us-equity-and-dollar...

I remain with that view... although for the Cable view I spotted around 2 weeks ago (while still bullish in a  more limited manner) that the weekly triangle structure was doomed to break down and I see quite a stronger rally developing overall. This was down to the way the rally began from 1.5804 which could not fit into the more conservative view I expressed in the article. It was just inconsistent because the implied projections would break my target. 

Comment by Jason on April 29, 2012 at 2:12am

hi Ian.
Thank for your response and glad that you are not offended.
Yes. I have read that report of yours but i personally find that is has been conflicting of sorts.
In general you have been a usd bull just like many (ie pretcher, larry williams etc). The big usd rally last year till jan 2012 was probabnlu the easiest (like what raj said) and now markets will whipsaw.
But what i find it difficult to comprehend is that you are calling for the gbp to top around 1.6139 - 1.62 region (you have been calling it lower ealier but it did not go down), but gbp has broken the extensions and traded above the 1.62 region. Your analysis is for the gbp to drop back to below 1.50 region (on weekly basis) but i am not sure whether that will happen (think no one can be sure). If this is the case, how do you explain the discrepancy?
You have also been calling euro to 1.38 or higher to evem 1.41 from jan till now. But euro has been languishing around 1.30 - 1.32 region. So I cannot envisage (pardon me) how the euro is goong to get there. But of course ultimately you may get it right...but analysis is about getting the pricing zones right as well as the timing quite close but so far the matkets have behaved otherwise.
Hope you understand that this is one of the over riding reasons why i feel that ew analysis (whether traditional or harmonic) failed these few months.
Hope you see where i am coming from.
Well, i am just sharing my heart felt opinions as i am no expert in ew analysis.
Thanks.

Comment by Ian Copsey on April 29, 2012 at 2:41am

Jason

In terms of there being any conflict in that view - I really do not understand what you mean. The views all in correlation. Yes, I have had to change the GBPUSD one - and before we reached the target I had originally envisaged. However, to say that because I'm bullish Dollars to 2017 then why has it corrected higher is a bit short sighted. Do you really expect moves to go in one straight line?

If I may say, you have not followed or understood my calls correctly. Following the mess of the consolidation below 1.4940 and once recognized I was bearish down to 1.2450-1.2800. Clearly I got that right. I then declared the move up to 1.3900-1.4150 and on the way it would initially stall between 1.3450-1.3548. Correct again. Yes, it hasn't got to 1.39-1.4150 yet. In your mind does it have to go there directly? Can there not be a longer Wave (b)? My apologies, but you are not being particularly insightful about how waves develop which suggests your knowledge of Elliott Wave and my version is rather sketchy. That is also displayed with your observations that "there are so many ratios." Yes, there are but if you understand the technique properly you'll know they can be fine-tuned and recognized in most situations. Corrections are the structures that have most trip wires and anyone, anywhere will acknowledge they are the most difficult to navigate.

In Cable I had been working with the view of the triangle but with a flat correction back to 1.6166. As I mentioned, I saw that things were breaking down 2 weeks ago. How did that happen? Well, while people were still bearish after the 1.5233 low I became bullish. I had a structure and things worked well. You work with a structure but need the lower fractal structure to slot into the higher. This worked for some while - of course some areas causing more problems than others. I have already said that we cannot be perfect. So I have people looking bullish, spot the inconsistency 2 weeks ago and kept people bullish. Is there something wrong with that?

"But what i find it difficult to comprehend is that you are calling for the gbp to top around 1.6139 - 1.62 region (you have been calling it lower ealier but it did not go down)"

As I said - you read structure as things develop and I recognized the breakdown but while my analysis had been bullish anyway. So when I recognize something isn't right, am I expected to say ... no I called it lower so I'll have to stick with it because I that's what I said before? That's not a particularly sensible thing to do is it?

I have said all along in this discussion that analysis is much like a code and EW is just that. If you don't understand the basic concept then you'll get confused as you'll not understand how price structure develops. You'll also not understand how and when structures break down. 

Comment by Jason on April 29, 2012 at 5:47am

hi Ian.
My comments are purely personal and have not intention to run you down.
Yes. You are right. I am not so well versed in ew analysis (although i have read the book twice).
Aslo i must admit that you are the very few guys who turned bullish the gbp recently. Well done.
But i have a question which i hope you can address (since you are running a service).
Your weekly analysis called for the gbp to drop to the 1.40s region. Will that need an alternate view now that gbp has rallied so strongly.
My personal experience with ew analysis is that much depends on the person. Like pretcher's ewi service which is so bullish usd, i think they have gotten carried away and have failed to pick up details that could have foreseen last few week's pull back in majors, especially the gbp. They only turned bullish after gbp broke the 1.6150 and have a wave 5 target at 1.6315..which i think its too late now.
Your call of euro reaching 1.38-1.41, if correct, will be a job well done. I will be the first to congratulate you.
But from my limited knowledge of ew analysis, this euro move may not be possible until we clear the 1.3280 - 1.33 properly.
Got to go now. Nice discussions here.
All the best Ian,

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