RET Classic- Research Results and Discoveries
Please note: As with any market movement “theory” Elliott Wave, its study and
Elliottician’s research results must be considered hypothetical. Hypothetical testing
of mathematical theories, patterns or otherwise, have inherent limitations. For
more information on these limitation please visit our risk page
Identifying Common Elliott Wave Patterns in Specific Markets
The Elliott Wave Principle defines patterns found in financial markets. The exact
shape of each pattern can vary significantly, as long as all of the specific Elliott
Wave pattern rules apply.
Elliottician’s research is strictly confined to patterns as they are defined by
the Elliott Wave Principle.
According to research undertaken by Elliottician, the most common shape of each
Elliott Wave pattern varies significantly in different financial markets. Shapes
also appear to vary considerably in different time frames and orientation. The ERP2
project was purposed to identify the most common shapes of each Elliott Wave pattern
in the complete spectrum of markets – and resulted in a range of databases containing
a large number of fully documented pattern details.
Forecasting accuracy is dependent on being able to correctly identify the beginning
of an Elliott Wave pattern and therefore calculate a probable range for the patterns
completion in both price and time. The more detailed and comprehensive the PowerPack
databases, the more accurately the RET software is able to catalogue new unfolding
market movements and compare it to the documented highly common historic patterns
within its database.
ERP2 uncovered why Elliott Wave is so often regarded as difficult to apply in real
markets. So called common Elliott Wave patterns do not appear to be all that common.
ERP2 fully documented the most common Elliot Wave patterns for each market, and
their most common shape for each time frame and orientation.
Because of ERP2, we believe the Refined Elliott Wave Principle is now bridging the
gap between theory and science, based on solid mathematical and statistical information
that historically verify pattern probabilities. The results are encoded into Market
Specific PowerPacks.
Improving the Accuracy of Refined Elliott Wave Forecasts
During the analysis process, the RET software identifies valid Elliott Wave patterns
in a chart, and rates them according to a predefined set of rules. The pattern with
the highest rating is known as the Preferred Count.
The process of rating Elliott Wave patterns is a new "science" - and is dependent
on determining which patterns more accurately match the most common patterns for
the particular market being analyzed.
There are many determining factors to consider when matching patterns, such as the
relative importance of price, time, volume and other parameters. For example, if
one Elliott Wave pattern matches the “ideal” very well by price but not by time,
should it be given a higher rating than another pattern that matches well by time,
but not by price? Which pattern has the higher probability of accurately forecasting
future market action?
The most pragmatic approach is to test large numbers of RET forecasts while varying
the relative weighting between these and other parameters - so as to find the set
of parameter values that most often results in a Preferred Count that gives an information
and valuable view of potential market movement.