When giving the technical analysis to forex, the wave analysis by Elliot is one of the most intricate subjects.
However, without knowing at least the foundations of Elliot’s wave analysis, it’s in principle impossible to earn money at forex. The analysis submitted by Elliot permits a trader to see the following:
*The algorithm of the trader’s currency pair movement;
*The precise point where the currency pair is located at a given moment during its movement.
*The prospects for the movement further development.
As regards the wave analysis, Masterforex-V Trading System suggests the simplest test: it indicates either you can earn money at forex, or you will just lose your trade deposit.
You should open your broker’s point-of-sale terminal or that of a
1. At what point of its movement a currency pair is located at a given moment? The reader must consider
*the long-term trends – d1, w1, MN;
*the medium-term trend - h1-4;
*the short-term trend - m5-15.
2. Where is located the trend reversal point? Do you see that the breaking through the latter clearly depicts the edge between the reversal of the trend and its recoil (in other words, the correction – just a form of the trend continuation).
*At which of trends does the reversal take place? Is it ì 1, ì 5-15, í 1, í 4, ä 1?
*Is it the trend reversal or correction regarded at a timeframe of a larger scale?
3. Dealing with any movement against the trend, breaking through which of current levels can transform recoil into the trend total reversal?
Masterforex-V suggests the following prompts:
* Stalwarts of Elliot’s classical wave analysis claim that the matter is in breaking through the current wave origin.
*According to the wave analysis by Masterforex-V, the breaking through the intersession flat pivot is detectable much earlier than the breaking through the current wave origin. Hence, all trend reversals are detectable already in a flat.
4. When can the trend come to the end? Where can occur U-turn in the movement of your working currency pair?
5. Can you see the inherent structure of the trend reversal (its algorithm)? If it’s not detectable, it’s just a recoil. Consequently, you may keep on opening deals along the current trend.
6. You also must count waves in the previous trend and those in a new one. Here you must clearly detect the true point of reversal in the current trading.
There are so many other facets of the given problem
If, within 1minute in the on-line regime, you can’t reply to those questions that concern the current trading, you shouldn’t open a real account. For sure, you will lose it. Without knowing such aspects of the wave analysis, you can face the following difficulties.
a). You will regard forex as complete chaos (fake, fraud, trickery, etc). You will not see it as the logical and regular movement when coming across any peak or candle (to start from m1 and up to d1, w1, MN).
b). Your profits at forex cannot be regular if you don’t get the intrinsic logic (the algorithm) of the currency pair movement. This algorithm is the same as at the short-term timeframes (m1-5, m10-15, m30), or at the medium-term trend (h1-4) - and at the long-term trends (d1, w1, MN) as well.
c). According to Masterforex-V Trading System, the most complicated trick consists in synthesizing the wave analysis allover 8 timeframes in the real time regime – to start from the short-term timeframes and up to those of the long term type. Succeeding in this enables you to do the following:
*You can “follow the market” - to start from any point of the currency pair movement. By the way, any of stalwarts of Elliot’s classical wave analysis hasn’t succeeded in this area. More in detail this aspect will be elucidated in the next chapters of this book.
*You will understand why “Elder’s 3 screens” model is regarded as the simplified approach to giving analysis to the currency pair movement - in contrast to 8 timeframes in Masterforex-V Trading System, where all these timeframes are intelligibly synthesized.
* You’ll get the key to the success achieved by
There is an example of the wave analysis at one of m15-timeframes.
Thus, we issue from the following.
*The deciphering of the currency pair movement at m1-5 is not submitted;
*Masterforex-V doesn’t present any reversal (protective) pivots.
*The place and role of the currency pair movement at h1-4 and d1 are not explained (they are elucidated only in the daily training in
I hope that the given chart permits the reader
*to see the role of the trading wave analysis;
*to get that without understanding of each step in the currency pair movement it’s impossible to take profit at forex regularly.
The difference in logic between the classical technical analysis and Elliot’s wave analysis .
The principal differences consist in the following:
*The classical technical analysis regards the currency pair movement from the viewpoint of patterns of the trend reversal and continuation.
*Elliot’s wave analysis regards this very movement of currency pairs from the viewpoint of the inner algorithm – the pulse (trend) waves or correction (flat).
For instance, let’s examine the classical figure of the trend reversal - “the head and shoulders” - from the viewpoint of the classical technical analysis of trading.
There is the same pattern of the trend reversal (“the head and shoulders”) from the viewpoint of the wave analysis.
The general plot of the 5-wave pulse (trend) is submitted.
It is submitted the simplest classical version of a trend. The trader must detect waves and subwaves in the real time regime.
Advantages of the wave analysis over the classical technical one.
*Here one can see the movement algorithm but not just a shape – i.e., “head and shoulders” as a pattern of the trend reversal.
The understanding of the movement algorithm permits you to follow the market.
*If you don’t comprehend it, your profit at forex can be just fortuitous.
There are examples of the difference in logic of the trading classical technical analysis and the wave analysis given to trading. In fact, the same movement can be examined from different viewpoints:
*Either it’s the classical technical analysis according to Chartism (see an example in the book by Neiman);
*Otherwise, one can examine this movement from the viewpoint of giving the wave analysis to trading.
There is a joke by a moderator of Masterforex-V
“Let’s regard a situation. In advance we do know what Chartists-analysts of the classical technical analysis – those who don’t apply the wave analysis – can write after the movement coming to the end”.
If the trend goes downwards, adherents of the “good old technical analysis”, the fanciers of “heads”, “shoulders”, “necks” (and other body fragments 
) call it the “head and shoulders” reversal pattern. If the trend goes higher than the to-day peak, they call it the “triple bottom” reversal pattern. By the way, who knows, what does this reversal figure reverse? 
*The reader should arrange waves and subwabes at the plot submitted above.
*Issuing from this, the reader must determine the resistances.
* The reader should arrange the points of the “bull” trend reversal towards the “bear” trend.
*The reader should understand how
*What criteria the reader can use for arranging waves and subwaves at this graph? The reader can always issuer from these plots in giving analysis to other charts in his trading.
Below we submit the bibliography of the books dedicated to the wave analysis by Elliot (see: //dma.masterforex-v.su/).
A. Frost and R. Precter. The total course of Elliot’s wave analysis.
B. Williams. The trading chaos.
H. Nily. The skill of Elliot’s wave analysis.
R. Balan. Elliot’s wave principle, applied to the market of forex.
R. Fisher. New techniques of trading according to Fibonacci.
R. Fisher.. The sequence. Applications and strategy for traders.
E. Peters. The fractal analysis of financial markets. Applications of the chaos theory to investments in economics.
D. DiNapoli. Trading with making use of DiNapoli’s levels.
R. Swannell. The market prognostication according to the new refined system of detecting patterns by A. Frost and R. Precter. Elliot’s wave principle as a key to understanding the market.
T. Joseph. Simplified analysis of Elliot’s waves. Practical application of the trading mechanical system.
J. Murphy. Technical analysis of future markets.
A. Cherepkov. Long-wave theory according to N.D. Kondratiev.
E. Neiman. Trader’s small encyclopedia.
A. Kiyanitza, L. Bratuchin (ed.). Fibonacci’s levels. Where the money lies.
M. Chekulayev. Fractals.
D. Vozny. Elliot’s code. Wave analysis of forex market.
V. Saphonov. Practival application of Elliot’s waves in trading.
Drawbacks of the wave analysis and its unsolved problems.
Those who regard the classical wave analysis as panacea for all troubles are mistaken (see Precter, Frost, Fisher, Nili, Vozney, etc.). You should think over the simple questions, missed in all textbooks of Elliot’s wave analysis.
1. Why does only 1% of traders get profit regularly at forex. At the same time, at least the half of all traders is acquainted with the wave analysis (at least at the courses attached to various Dealing Centers).
There issues quite a logical conclusion. More than 90% percents of traders (Elliot’s adherents) regularly lose their deposits. However, when one deals with such a percentage, traders are not to be blamed. The fault must be imputed to the form of interpreting Elliot’s classical wave analysis - at present expounded by Precter, Fisher, Frost, Vozney, etc.
2. Why the wave criteria are so smeared and fuzzy that the double meaning becomes admissible (the wave marking). One can see the layout only after the events (post factum) - i.e., when the movement has come to the end and the wave analysis becomes of no practical use for the trading trader at forex.
By the way, there is one of the trader’s jokes: “if 2 wave-adapters gather in a room, there appear at least 3 different opinions”. However, further such specialists come to consent”.
Thus, what kind of science is it? If one can interpret Elliot’s wave analysis laws only after the end of the trading movement in 70% of cases?
3. Why do the classical wave analysis adherents give so many examples that concern the “ancient history” – even if they aren’t “historians”? Frost and Precter waste so much of their time and paper on the wave analysis – for pity, on that of the prehistoric kind (analogously, this reminds the time of the Middle Ages, Great French Bourgeois Revolution, American crises of the year of 1929, etc.).
Citation: The total course of Elliot’s wave law by A. Frost and R. Precter (translated by D. Vozney).
It’s not such a job to gather data for investigations of movements in prices during the last 200 years. However, as regards an earlier period, one can rely just on statistics less precise. The long-term price index is compiled by F. Brown and Sh. Hopkins (supplemented by D. Worsh). It’s based on the common “basket of goods” related to the period 1950 – 1954. By combining Brown –
Within the framework of Elliot’s current model and according to logic of this author, - to start from 1789 and up to the present - the Principal wave level must simultaneously follow other waves and forestall them. Analogously, one can compare “waves” concerning other areas of the human habitual activities with the standard time-to amplitude correlations. If a 200-years-old wave, inherent to the Principal wave level, has almost come to the end, this wave is to be corrected by 3 waves of Super level (2 of them are directed downwards and one is directed upwards). Such a pattern can keep on going on during 1 or 2 centuries. It’s really so hard to grasp the state of the world economics slow development during such a long period. However, this possibility mustn’t be expelled. Such a clear hint at the long-term difficulties doesn’t exclude the contribution of technical sciences to the development of the society. Elliot’s wave law is the law of probability and relative levels. However, it doesn’t stipulate (or predict) the precise conditions. At the same time, the current Super level (V) can indicate either the economical and social stagnation or decay in important areas of the human activities.
*You guess, such information is much of help at the real trading at forex?
* Hence, why do A. Frost and R. Precter, who are not historian-professionals, write this for traders-beginners? One can draw an analogy: let’s suppose that an agronomist (even one of the highest qualification) gathers apprentices and tediously in detail tell them about actuality of the aeromechanics applying to … the branch of cardio surgery. However, such a “specialist” wouldn’t say a word about his “experience” to cardiologists.
* Hence, what is the role of the “wave analysis” in the mankind history? The reader should take into account that A. Frost and R. Precter maintain a discreet silence – i.e., they don’t publish their results in strictly specialized historical editions. You just try to find the clue – and you ‘l see the aspects that Precter, Frost, Fisher and etc. try to keep from traders. More in detail this point will be elucidated in one of Masterforex-V Book next chapters – “Fibonacci’s levels: the reality and illusions”.
4. Why do modern adaptors of the classical wave theory present waves only in large-scale timeframes – such as h4, d1, w1, MN? The reason is that any changes in timeframes of such large-scales become detectable only after several months – or even after several years. Who ever did check the past wave analysis given by the classical wave adapters, recording their plots previously? Does one notice any changes in the charts? Anyway, post factum the wave analysis always comes to be true and correct.
5. Why do the wave adaptors don’t arrange the waves at m1-5, m15-30? In this case, it would be possible to check the correctness of their wave marking within half an hour – or a day. The reader should keep in mind that Elliot’s wave analysis logic is the same either at m1 or d1. Hence, why those individuals who haven’t mastered the wave analysis at m1-5, try to teach the students to work at d1, w1, MN?
6. Why do the wave adapters install “stop” under the 1st wave origin? That is, when the deal is closed in the bank (at a loss))?
*If the trend reversal doesn’t occur, the currency doesn’t “stagnate and stand still”. The trend is going on. However, the classical wave analysis doesn’t consider any alternative to the wave analysis, not going beyond the event of “stop”.
*In Masterforex-V trading system, instead of “stop”, one uses the “lock”.
*You should try to understand the principal difference. If succeed, you will come to the synthesis of the short-, medium- and long-term trends.
7. Why does the classical wave analysis enable us at best to identify currency pairs just during 30-35% of time of their movement (in the pulse), whereas the rest of the movement (the correction waves) can become detectable only post factum?
R. Balan and B. Williams have written about this drawback of the classical wave analysis most openly and frankly.
Citation: - see “Elliot’s wave principle – an appendix to forex market” by R. Balan.
The preliminary recognition and the correction marking by specific algorithms is a very difficult job. The reason is that the correction structures are more variable than pulse waves. Sometimes the structure correctional nature becomes evident just in retrospect. In other words, when the structure formation is accomplished and all events have already happened.
Giving analysis to the charts that depict corrections of intricate types, in “Trading chaos” B. Williams has written the following.
Citation – see “Trading chaos” by B. Williams.
Elliot’s waves did make sense before. However, simultaneously, they were hardly applicable to trading. I related my inability to the correct counting of waves to the lack of my knowledge and/or experience.
To those not well-informed, I explain.
*According to R. Balan, currencies are identifiable in the trend just during 30-35% of the time of its duration. During the rest of the time, there takes place just correction.
*Consequently, during 65-70% of the trend duration, Elliot’s wave analysis helps us to prognosticate the currency movement only post factum (according to other sources, up to 80% of the trend duration).
a). If R. Balan and B. Williams write something like this, you can imagine what a trader, less experienced, can feel during the auction! For instance, at the “bull” trend the currency has fallen down. In this case, should one stake on “sell”? Or would it be better to open one more deal on “buy” – in order to lessen the losses? Is it the trend reversal or just a recoil?
b). Even R. Balan and B. Williams for sure don’t know the technique of determining the reversal true point in the on-line regime. Do other classicists of the wave analysis comprehend this logic? They don’t write about such aspects so frankly and openly. At the same time, nothing principally new is added to the brief course of the classical wave analysis by B. Williams and R. Balan. In particular, other classicists of the wave analysis don’t elucidate the technique of determining true points of the currency pair reversal.
Elliot’s classical wave analysis: is it Grail for the successful trading?
You guess, and you will find the answer!
In contrast to the classical wave analysis adaptors, Masterforex-V Academy enables the students to study foundations of the wave analysis coolly and impartially. One can more profoundly see its advantages and drawbacks. For this purpose,
1. The wave analysis is examined in 4 directions:
*the classical wave analysis (see the materials for the 11th grade of the traders-novices’ School, attached to our Academy);
*New techniques of the wave analysis according to Masterforex-V Trading System – the applications to daily trading are attached;
* The wave analysis by Nily;
* The wave analysis that doesn’t coincide with Elliot’s approach.
2. Masterforex-V Trading System examines the classical wave analysis. We deal with all timeframes– from m1-5 and up to h4-d1.
3. To the beginner, Masterforex-V Trading System gives prompts concerning logic of the wave- and subwave behavior in the on-line regime:
* It’s alternative to the doctrine elaborated by the wave analysis classicists (such as Precter, Fisher, etc). Such specialists state that 70-80% of waves are detectable only post factum - I wonder why a trading trader should be interested in history of the wave analysis.
* Thus, even the beginners can orient themselves in the on-line regime. They can see in what subwave of which of the waves the current movement does occur. Levels of resistance (in the “bull” trend) and those of support (in the “bear” trend) also become detectable.
There are examples of calculating GBP/USD currency pair movement according to Masterforex -V Trading System on April 22, 2008 . Here just short-term timeframes are examined (the long-term ones are excluded)
1. The medium-term timeframe h1 : it’s necessary to wait till the “bear” wave comes to the end at h1 and the movement becomes upwards-directed.
*** When the maximum 2.0024 is broken through, the wave becomes prolonged upwards.
Divergence. Intersession flat -
2. The short-term trend :
*The initial prolongation of the “bear” wave at h1 (breaking through the intersession flat downwards).
*Calculation of the goals at the foot of the chart = 1.9742 (the error makes 1 point).
*** Pivot ( ðàçíûå öèôðû ); a(C)=recoil 76.4%
*Breaking through the intersession flat protective “bear” pivot and the upwards-directed reversal.
*Estimations of the goals at the top of the chart.
*** Breaking through the intersession flat upper bound without breaking through the lowest one. That is:
*at h1-h4 the wave A can come to the end when it meets the wave B (downwards or upwards; further the fractal zigzag reversal is directed downwards;
* Or to the wave A, accompanied by the further breaking through the level 2.0024;
*otherwise, before the breaking through the level 1.9877 the wave B exists, and further there occurs the breaking through the minimum (the wave becomes prolonged downwards).
Intersession flat =
*** Breaking through the maximum (the upper bound of intersession flat) = the wave prolongation upwards.
Intersession flat:
*One opens deals on “buy” and follows the “bull” trend. One must clearly see waves, subwaves and maximum recoils that remain within the bounds of the ordinary correction i.e., when the “bull” trend is still going on .
*** First, one bound of intersession flat is broken through. Afterwards the inverse process takes place – i.e., there arises an intensive signal of a new direction. Before the breaking through intersession flat upper bound upwards the wave B can exist.
*One detects the trend end in m1;
*One achieves the goals at the top - at 1.9995/2.0000. The mistake makes just 2 points in the trend that contains more than 250 ones.
*** Breaking through the maximum = the wave upwards-directed prolongation. Fractal zigzag reversal directed downwards.
*In the medium-term timeframe h1, the previous maximum 2.0023 is not broken through
*** Breaking through the upper bound of the intersession flat, whereas the lowest bound of it remains unbroken.
*either the wave A comes to the end at h1-h4 in the downwards or upwards - towards the wave B; further the fractal zigzag reversal becomes directed downwards;
*or to the wave A, further accompanied by the breaking through the level 2.0024;
*Otherwise, before the breaking through the level 1.9877 the wave B astill exists; further the breaking through the minimum occurs (the wave is prolonged downwards). Intersession flat –
Breaking through the minimum (the lowest bound of the intersession flat) – the wave is prolonged downwards at h1-h1.
*The new movement downwards as the moment of truth at the medium-term trend.
*** The correction mesh 1.9745-??
*The next day there occurs the planned downwards-directed reversal (see the previous chart). Thus, we calculate the goals at the bottom of the chart.
The corresponding charts are submitted here.
You should try to estimate the trader’s training level after less than a year of the daily training in
*One should understand how easily and freely one can “follow the market” in large- and small-scale timeframes - either in a trend or a flat. In contrast to this, classicists of Elliot’s wave analysis (B. Williams, R. Balan, etc) admit that during currency pair movement (in large-scale timeframes) in Elliot’s wave analysis 70% of waves can be identified only post factum. Should one be engaged in training at all if one cannot understand 70% of events that occur at the market?
*Why students of our Academy win at dozens of various competitions? Besides, they openly augment their accounts by factors of scores and hundreds in a month at trading terminals of western brokers!
*This is the minimum level of the trader’s professional training, necessary for getting profit regularly. If you feel that you still haven’t reached at least this level of understanding the currency pair movement at forex, don’t open a real account – you will lose it!
*Once more you should search the charts. You must try to understand logic of following the market according to Masterforex-V Trading System. You must learn how to bring together 8 timeframes and several techniques (Wave Analysis included). Under these conditions, in contrast to Precter, Frost, Fisher, Vozny, etc, you will not be forced to scrutinize the history of quotations – to start from the primitive society and middle ages. You will just not be interested in such aspects.
Goals of the next chapters of Book 2 by Masterforex-V, dedicated to the trading wave analysis
1. In a simple and comprehensible form we will submit the foundations of the basic course of Elliot’s wave analysis . As a rule, such courses are very costly. At the same time, after the graduation only a few can earn money.
*The next chapter of Book 2 is dedicated to the brief course of the trading wave analysis. There we will submit the materials of the 11th grade of the school for the traders-beginners, attached to
2. We will examine the unsolved problems of Elliot’s classical wave analysis of trading
We will explain the mistake made by Elliot’s adapters in its essence – such as Preckter, Frost, Balan, Fisher, Vozny, etc. Because of their mistake they can prognosticate successfully not more than just within 30%-35% of sections of the currency par movement in the real time regime.
3. We will submit logic of solving of such problems of the wave analysis in Masterforex-V Trading System (see the above-enumerated 7 problems of the classical wave analysis and their solution according to Masterforex-V Trading System).
4. We will present the technique of the daily training concerning the theory application to the current trading during 1-4 years in the real-time regime.
*You must learn to understand every movement of the currency pair at forex – to start from m1 and up to d1-w1 – in particular, via the wave analysis.
*You must know how to synthesize binary regularities among themselves at various timeframes, thus always “following the market”.
*You will get the opportunity to ask questions concerning the materials not clear to you (the theory and its application to the current trading).
*You will get graduate education at chairs of our Academy (trading at m1-5, m15, analysis by Nily, the non-Elliot wave analysis, etc.).
Thus, every day you will learn how to apply Masterforex-V Trading System theory (and those elaborated by other experienced traders, the wave analysis included) to the daily current trading at the closed forum, attached to
You can discuss the chapter with the Academy members by following the link
Part IV. Unresolved secrets of classics of the Forex technical analysis >>
Book 3. Points of opening and closing of positions at the Forex market (basic course) >>
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